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Old 07-09-2007, 11:34 AM   #41
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Originally Posted by pj86 View Post

Therefore, although lump sum beats DCA 65% of the TIME, I think DCA beats lump sum investment more than half of REAL LIFE SITUATIONS.
Sorry; we prefer to ignore real life.


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Old 07-09-2007, 11:41 AM   #42
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Originally Posted by pj86 View Post
Thank you for this info. Do you want to share your sources?
The numbers are from the article linked to earlier (DCA monthly 12 times vs all-at-once at the beginning of a year):

One could play with the figures a little, but the message stays the same: lump sum has a higher mean return and a higher variance than DCA. Which is probably (my guess) why advisors lean toward recommending DCA'ing a sudden acquisition of cash -- the probability of painful loss is lower, and they figure their clients will be likely to depart rapidly if a 10% decline hits them suddenly.

If you are investing for 10 years (say), then it won't really matter if you DCA'd over the first 12 months or not.

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Old 07-09-2007, 11:43 AM   #43
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Originally Posted by haha View Post
Sorry; we prefer to ignore real life.

That is often so tempting, isn't it
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Old 07-09-2007, 04:15 PM   #44
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For me, DCA isn't adding money to an investment tool on a fixed schedule. It only applies when you actually have a lump sum that can be invested at once, not the income trickle.

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