If you’ve come into some money from a relative passing, sold a business or investment property, or maybe downsized your home, you might be wondering how to properly invest this pile of cash.
Whatever the case may be, you’re sitting on some cash and don’t want to make a bad decision and have the market crash as soon as you invest it.
Today’s show discusses what you should do.
When investing a large amount, you really have 2 options:
- All at once (Lump Sum)
- A little bit at a time (Dollar Cost Averaging)
Lump Sum Strategy:
- You’ll gain immediate exposure to the markets as soon as possible
- As the markets continue to grow you get to participate in that growth and take full advantage of it
Dollar Cost Averaging Strategy
- If you have $100,000. And you wanted to invest over the next 6 months. You would divide $100k by 6 and invest that amount at the start of every month
- The advantage of doing the dollar cost averaging strategy is that you minimize the downside risk of the market falling right after you put it it
Quote: Jeremy Siegel – “fear has a greater grasp on human action than does the impressive weight of historical evidence.”
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