Lesson 5 of 7 · 2 min · Investing

All at once, or bit by bit?

What waiting in cash usually costs.

1. Say you get $12,000 at once. You can invest it all today, or put in $1,000 a month for a year.

2. Spreading it out feels safer. If prices drop along the way, some of your money buys in cheaper.

3. But markets rise more often than they fall. Money that waits in cash usually misses part of the rise.

4. Vanguard tested this on market history in the US, the UK and Australia. Investing everything at once came out ahead about two times out of three.

5. Going slowly still has a use. If it is the only way you will start, or sleep at night, that can be worth the cost.

6. This is about a lump sum you already have. Putting part of every paycheck in is a different thing: that is simply investing money as soon as you have it.