facebookCan you invest a lump sum at the beginning but continue contributing in smaller amounts on a regular basis? - Seedly

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Anonymous

19 Jan 2020

Stocks

Can you invest a lump sum at the beginning but continue contributing in smaller amounts on a regular basis?

For example, if I have an initial investment of $10,000 and $1,000 monthly contribution after, Is this lump sum investing or dollar-cost averaging? Or a mix of both? What are the pros and cons?

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Pang Zhe Liang

19 Jan 2020

Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)

This article will give you some information on how dollar cost averaging fares in some common scenarios: https://www.blog.pzl.sg/dollar-cost-averaging-s...

Through the article, you will understand the pros and cons that each method may yield.

With this purpose in mind, we will need to go back to your investment objectives to understand the rationale for your action, e.g. to invest lump sum vs dollar cost averaging on a regular basis. You can do both, but the key question is - which part of your investment objective will this fulfil? Furthermore, what is the opportunity cost associated with it?

All things considered, you may wish to consider to doing a comprehensive financial planning to help you create an investment strategy that works.

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