If you’ve found yourself sitting on a sum of cash in your savings account and you’re asking yourself: Is this a good time or a bad time to invest?
Here’s the thing, any time is a good time to invest (see here for a great explanation).
Is it the best time? Probably not.
Is it the worst time? Very unlikely.
This leads us to the next question which is:
Do I invest it all now as a lump sum or do I dollar-cost-average into the market?
Studies show that investing as a lump sum will generate better returns 67%1 of the time.
From a purely financial point of view, that means if you have the money available and you want to invest for the long term, you should invest it all now.
But there’s also the psychological side of things.
Some people just won’t sleep at night wondering if they picked the wrong time.
If that’s you, pick a time frame that suits you and invest a specific amount each interval.
That could be 2 months just as it could be 2 years, but once you pick that time frame, stick to it and don’t try to time it.
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Vanguard Research. (2012, July). Dollar-cost averaging just means taking risk later. http://www.smartretirement.com.au/wp-content/uploads/2015/06/7.23.2012_Dollar-cost_Averaging.pdf