Part 7/8:
The conclusions were striking, indicating that even under optimal conditions where the market was at an all-time high, waiting for a significant decline tends to erode returns, further highlighting the pitfalls of timing the market.
Final Thoughts: Making Your Decision
As you consider how to approach a lump sum investment, it is likely optimal to invest in a risk-appropriate portfolio as early as possible. The analysis supports an immediate lump sum investment in most cases.
However, the behavioral appeal of dollar cost averaging shouldn't be dismissed entirely. If concerns about regretting a lump sum investment lead you to favor DCA, it might indicate that your asset allocation needs reconsideration.