Strategy · Behaviour
Dollar-cost averaging vs lump sum: which is right for you?
Say you've got $20,000 to invest. Do you put it all in today, or spread it over the next year? The first is 'lump sum'. The second is 'dollar-cost averaging' — investing a fixed amount on a regular schedule, regardless of the price.
What the maths usually says
Because markets rise more often than they fall, investing a lump sum tends to come out ahead on average — your money is working sooner. But 'on average' hides the bad cases: if a downturn arrives right after you go all in, drip-feeding would have softened the blow.
What actually matters more
The bigger risk for most people isn't choosing the slightly worse method — it's freezing, investing nothing, and waiting for a 'better time' that never feels obvious. Dollar-cost averaging is often the right choice simply because it keeps you moving without the fear of picking the wrong day.
- Have a regular income, not a big pile of cash? You're already dollar-cost averaging — keep going.
- Got a lump sum and a long horizon, and you'll lose sleep going all in? Spreading it over a few months is a perfectly sensible compromise.
The method matters less than the habit. The investor who keeps going almost always beats the one who waits.
See it on your own portfolio
Find out which of these forces your ASX portfolio is most exposed to — in 60 seconds.
Keep reading
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PortLens provides general information only — not personal financial advice. Examples are illustrative. Always do your own research or speak with a licensed adviser before making investment decisions.
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