Course 106: Methods for Investing in Mutual Funds
Decision Time
In this course
1 Introduction
2 Waiting, or Market-Timing
3 Investing All At Once, or Lump-Sum Investing
4 Why Dollar-Cost Average?
5 Decision Time

While market-timing is out of the question for all investors (but some still try), whether you invest all at once or a little at a time depends on how much time you have to invest and whether your primary goal is maximizing return or minimizing risk.

The shorter your time horizon, the greater chance you take of losing money with a lump-sum investment. However, if you had $20,000 to invest, it probably wouldn't make much sense to invest $1,000 per year for the next 20 years. Over long time frames, funds go up more often than they go down, and when they go down, they eventually bounce back. It is almost certain that the NAV you would pay 10 years from now would be higher than the NAV you would pay today.

We suggest combining the two strategies: Invest as much as you can today and vow to invest a little more each month or quarter. That'll keep you disciplined and have you investing right away.

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