S&P 500 Index
Asked 6d ago
I am thinking of putting my first $10k into Kristal.AI's S&P500, since there are no fees for the first $50k of investments. There are two indexes that I am looking at:
CSPX (minimum investment of $4.3k)
IVV (min. $357)
If I do CSPX (Irish domiciled, 15% tax on dividends), I can only DCA two times, while I will be able to DCA over a longer time horizon for IVV - but I would be subject to the 30% tax on dividends.
Which should I be going for amidst this COVID19 pandemic?
Lump sum wins 90% of the time. DCA is a strategy used for psychological and emotional control, not a strategy for better returns.
If you're able to stay logical and insane, lump sum is statiscally a better strategy. DCA works for most people because it is easier to stick too and not panic.
You need to determine your risk appetite and investment horizon, as well as the asset that you are intending to invest into. Here is a simulation:
Generally, both methods work so long as you are invested in the right asset. If you are worried about short term volatility, then use dollar cost averaging to reduce some of this risk.
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