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when to dive
Old 01-27-2013, 05:45 PM   #1
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when to dive

We have some investments that have matured recently so have a notable sum to invest in mutual funds as we approach our desired 50/50 AA. But with the market doing SO well, should we pick an amount of time to wait to see if there is a correction? I know enough not to try to market-time, but still, buying at the peak seems a bit imprudent.
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Old 01-27-2013, 06:00 PM   #2
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How about DCAing in over 6 to 12 months?
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Old 01-27-2013, 06:02 PM   #3
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Invest over a matter of months. Let's say you have $50,000......invest 5k a month OR if the market turns down, double up, invest 10k that month.

This works for me but you should talk to a pro because I'm not competent to give advice. I'm doing the same, have for years.....I don't know when the market will go up or down so I buy a little more when it's cheaper......good luck
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Old 01-27-2013, 06:02 PM   #4
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How about DCAing in over 6 to 12 months?
+1

No need to dive, wade in gradually.
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Old 01-27-2013, 07:37 PM   #5
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How do we know the market (I'm assuming equities not bonds) has peaked? If you DCA you can DCA on the way up or the way down. Does it really matter if you invest now? It appears that it is more a matter of comfort level than actual investment return probablity. If you need X to reach your desired AA and ISP then now is the time. Hopefully your thinking long term.
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Old 01-27-2013, 07:55 PM   #6
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I would value average in over 6 to 12 months. Value averaging is slightly better than DCA in that you invest more when the market is relatively lower and less when the market is relatively higher.

So let's say you have S50k and want to invest over 10 months, then the ending balances would be $5k,$10k,$15k, $20k et al for months 1, 2, 3, 4. et al. Invest $5k. Then a month later invest an additional amount to bring the balance to $10k, Ditto the next month to bring your balance to $15k. Repeat until the whole $50k is invested.
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Old 01-28-2013, 10:00 AM   #7
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A timely article. What to Do with a Lump Sum?
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Old 01-28-2013, 10:12 AM   #8
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Originally Posted by palomalou View Post
We have some investments that have matured recently so have a notable sum to invest in mutual funds as we approach our desired 50/50 AA. But with the market doing SO well, should we pick an amount of time to wait to see if there is a correction? I know enough not to try to market-time, but still, buying at the peak seems a bit imprudent.
DCA the amount.

1) Set a time you want to get to the 50/50 AA.

2) Divide the amount to invest by the total of months

3) Invest the amount from #2 above each month

Simple as 1,2,3.

No time like the present to start as if you wait for the perfect time, you may be waiting..and waiting..and waiting as there is no real perfect time.
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Old 01-28-2013, 02:58 PM   #9
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Originally Posted by easysurfer View Post
DCA the amount.

1) Set a time you want to get to the 50/50 AA.

2) Divide the amount to invest by the total of months

3) Invest the amount from #2 above each month

Simple as 1,2,3.

No time like the present to start as if you wait for the perfect time, you may be waiting..and waiting..and waiting as there is no real perfect time.
I totally agree, with 1 little addition...if you see a decent dip in prices during any of those DCA months, there is no harm in doubling up for that month and shortening the total number of months by 1.
I did this with VHDYX in March 2009. I'd been eyeballing the fund for months. I was going to do a standard VG account opening with the minimal amount required, and set up automatic DCA for 12 months.

When I looked at the market conditions, I not only opened the account, but threw in the equivalent of 6 months DCA, all in 1 fell swoop. Then I set up 6 more months of DCA and left it on autopilot.

DMT or a Carpe Diem moment ?

You decide....

Look at the 5 year performance chart for this fund. I just plain lucked out!
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Old 01-28-2013, 10:52 PM   #10
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There have been innumerable studies done on this subject. Financially, the best method is to invest the entire lump sum immediately.

DCA'ing is more emotionally comfortable, but financially worse.
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Old 01-29-2013, 10:03 AM   #11
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There have been innumerable studies done on this subject. Financially, the best method is to invest the entire lump sum immediately.

DCA'ing is more emotionally comfortable, but financially worse.
I wonder if the studies take into the account the folks who invest the entire lump sum, then get cold feet and bail out or if the studies were more a what if in that if one was to put in a lump sum and not touch the amount.

http://lazytraders.com/insights/dca-...nce-investing/


try the free tool:

http://www.moneychimp.com/features/dollar_cost.htm
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