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It's common to find that cash feels safe, whereas stock markets often appear intimidating. Investors are frequently distracted by concerns such as market valuations, global events, and economic updates, which can create a perception that now is the worst time to invest. This fear can lead to indecision, prompting individuals to sit on their cash instead of making investment moves.
Understanding the Options: Lump Sum vs. Dollar Cost Averaging
You have three core options when you find yourself with a lump sum:
Invest it immediately in a risk-appropriate portfolio.
Engage in dollar cost averaging (DCA), investing fixed amounts systematically over time into a risk-appropriate portfolio.
Wait for an opportune moment to invest, such as when market prices decline.