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Marcus
23 Jul 2020
Founder at manualmode
It really depends.
Factors that would be good to consider either the two:
· Are these your only savings? Or are these the money that you're willing to set aside for investing. (For the former, I would suggest DCA)
· Do you have recurring income in the immediate future? Like a fixed income from a stable job of which you can take a portion out for investing.
· Any forseeable big ticket expenses in the near future (1-2/3 years)? e.g. House, Wedding, etc. (For this, I would suggest DCA)
Market factors
Currently the general market is still much lower than the highs before the COVID-19 March plunge. Nevertheless, some industries/ markets such as semiconductors, tech (NASDAQ) have seen a huge rise and even higher than the highs achieved before the plunge. Therefore, personally, I think it would be wiser to DCA if:
1) You're not sure which stock to invest in and would prefer a more nuanced approach to investing (DCA saves money over the long run but taking out the guessing game in investing)
2) Have thoughts that the current economic outlook will remain generally bleak for the foreseeable future (then again markets seem to respond otherwise thus far)
Lots more to talk about, but I'll just leave you with the above to consider about.
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This question is too generic. But generally, if you plan to DIY, then 20k is quite hard to do DCA, as the brokerage fee will eat into your return, in this case you might as well do lump sum of 10k or 20k.
If you are alright with not DIY and invest in robo-advisors or Regular Savings Plan, then go for DCA.
Historically, DCA fares better in a bear market and lump sum performs better in a bull market.