Dollar Cost Averaging vs Lump Sum Investing, Explained - When Should You Invest?

[@stephandden]

When you invest, do you use a dollar cost average or lump sum approach? Let us know! 👀

[@nsstreethookers1877]

If I have a lump sum of $200k that I can get a 5.5% return on for the next year from a couple of savings accounts that are offering promotions wouldn’t it make sense to use those promotions and hope a recession hits within that time period then dump it into the market?

[@luvuyotyoloda7403]

This year I went off social media to focus on more important things like investing and paying of my house bond as early as possible, blessed to have bumped into this channel, "when the student is ready, the teacher will appear"

[@emilyboulter5978]

I get paid twice per month. My first paycheque is used to pay my credit card. Anything left goes into my savings/investments. My second paycheque goes into my mortgage. I really like this method because it allows me to regularly contribute to my investments and not have to “decide” when to invest.

[@stephandden]

Thank you for sharing! We love that you have a system that works for you 😊

[@fasteddy3336]

I use a hybrid method. If I get my bonus in December for let’s say $10,000, I invest 5000 as a lump and then put $1000 in a month until it’s all in the market. The decade investor on KZbin used to come up with an article that said lump sum is better 66.66% of the time and dollar cost average is better 33.33% of the time.

[@stephandden]

Thank you for sharing! 😊 Yes, the studies we saw were similar - lump sum investing was better than majority of the time, but not always!

[@anastasiabornstein]

Wow! Just yesterday I was taking to my husband about the best strategy to invest, when we were trying to decide what's better - monthly or yearly investing, and today I see a video from you guys explaining that! Thanks for this information and everything that you do - it is really helpful!

[@stephandden]

Amazing timing! We love to hear that 😊 Thank you so much!

[@ticiadiasbrasil]

Well... I do not have a lump sum to invest :( I just squeeze my paycheck trying to put a little cash into ETF every month. But at least I'm being consistent. Thanks for sharing your knowledge with us, guys! Great content! New subscribed here!!

[@stephandden]

We feel that! You’re doing great by investing some money every single month 👏🏿👏🏻 And thank you so much!

[@bk-vc1cr]

Maybe both? My TFSA/RRSP are maxed out so I DCA into my non-registered while I ‘save’ for next years contribution room for TFSA/RRSP that I lump sump on Jan 1 & after tax season 😅.

[@stephandden]

Thank you for sharing! We love that you have a plan and max out your TFSA & RRSP at the top of the year 😊

[@NiightStarz]

This was helpful. I always wondered whether it was a good idea to invest the lump sums I had. Now I know.

[@stephandden]

We're happy to hear that this was helpful! 🙌🏿🙌🏻

[@queriiseralph6586]

Love the info. Thanks!

[@stephandden]

Thank you for watching! 😊

[@MFTW]

I do dollar cost averaging throughout the year with non-registered. When the registered come out, I do a big lump-sum to fill those immediately!

[@stephandden]

Amazing - that’s a great way to do it! 👏🏿👏🏻

[@Somives]

I do both. Budget a certain amount every paycheck and buy lump sum from any bonuses or tax returns or anything. I do think time in market is crucial, sitting on cash to slowly invest into the market seems like timing the market to be honest.

[@stephandden]

Amazing - that's great to hear! Yes to time in the market being crucial. 👏🏿👏🏻

[@rezaolad543]

An informative video! I enjoy how you back up your points with facts and figures from various sources. It would be fantastic if you could leave those references links in the comments area.

[@stephandden]

Thank you so much! Great suggestion 😊

[@ethantomalin-reeves7434]

Yes!

[@canpin]

I always go lump sum since im here in the long haul. It makes more gain over time for me.

[@stephandden]

That’s great! Thank you for sharing 😊

[@blackgrandpa7652]

Shout out from Brampton Ontario Canada 🇨🇦

[@stephandden]

Real talk! There’s a lot of talent that’s come out (and is continuing to come out) of that city! 👀

[@julsh9776]

Dollar cost average. I buy ETFs at each paycheck. 25% of my paycheck.

[@stephandden]

That’s great! Love that you put 25% of each paycheck towards your investments 👏🏿👏🏻

[@M1nhDev]

That is lump sum :)) I mean most of us cant do dca except when we have a large sum of money sitting on the side

[@saadfarooqui5649]

Hey so I have a quick question about TFSA. Let’s say my limit is 20k for tfsa and I have put 20k in that account and then invested that money in stocks. If I have 25% profit and now I have 25k. What happens if I sell my stocks and put my money back in TFSA. Do I have to pay tax on 5k extra? Would it even let me put all that money back?

[@kstar_ca]

Yes, you can sell yours stocks at a profit and maintain a balance exceeding your personal TFSA limit without any tax consequences. There are bunch of articles and videos out there regarding situations like this.

[@shreyaratra1306]

What about lump sum investing right now? With stock prices being at all time highs due to US elections. If I have $10,000 in cash, should I be investing it all? Or DCAing due to the current all time highs ?

[@LigneDesign]

Add on top of prices being at all-time highs, the Canadian dollar is at a decade low, and keeps falling! Such a convergence is especially negative. This is a unique case and opportunity to investigate and find ideal solutions as well as workarounds!.. 🧐

[@Thewu168]

Invest what you can, when you can in good etfs and stocks. Don’t over think average vs lump sum.

[@stephandden]

Agreed - investing as early as possible and as often as possible is key 😊

[@seburgh]

I never did investment as I still feel a bit lost there. I am only doing TFSA GIC where gave me an average of 5.5% the last 2 years. Wondering if I could go through my bank (RBC) to start doing ETFs with my TFSA. we started adding 2k per month on our TFSAs

[@ryan33262]

What are you saving for? Are you using your TFSA as an extension to your savings and expect to withdraw at a known event or unexpected circumstance? Obviously we expect higher returns in stocks, but there's rational and psychological reasons why not everyone is just 100% stocks.

[@seburgh]

@ more for a possible pre-retirement. Hoping to have enough money in 20years to live from the interest.

[@rajbirgill7671]

Guys thank you for the video, btw any video explaining non-registered investment account? Is it worth it or not?

[@stephandden]

We have a video on our channel called ‘Taxable Accounts, Explained’ that covers that topic! 😊

[@rajbirgill7671]

@ oh thanks i will watch that

[@victorjimenez9597]

hi i was using your budget template but it got deleted and it requests permission to edit again

[@stephandden]

You have to make a copy! 😊

[@VlCEGRlP]

I heard that you can transfer US funds from EQ bank to wealthsimple and avoid the 1.5% conversion fee negating the need to use norbits gambit on a platform like quest trade. Are you able to make a video on this?

[@TheCounterpointer]

How would you have gotten those US funds in the first place?

[@VlCEGRlP]

Through a 1:1 conversion just don’t have to pay the added 1.5% fee

[@TheCounterpointer]

@@VlCEGRlP I still don’t follow it. Do you have some kind of income source that keep paying you USD? Otherwise, the reason that you have this USD in the first place is because you went through either a 1.5% (or other FX rates) fx rate fees such as Wealthsimple, through bank conversion or Norbit’s gambit. Or do you mean EQ bank will somehow convert CAD into USD at no cost at all?

[@VlCEGRlP]

@@TheCounterpointer The last point. Heard that EQ bank's USD account can convert the funds with no extra cost (meaning no 1.5% extra fx fee). My initial comment wasn't stating as a fact, just heard that was a possibility so looking for further info.

[@PeterParker-wj3cr]

This is more of a subjective topic. In most cases, as outlined in this video. Most won't really have a choice but to DCA anyways. If you don't have a lump sum to invest consistently anyways. Then, DCA is the only way to go. Now if you have an inheritance to invest. DCA is an excellent option. Especially if the market crashes or corrects within the year. This is the true benefit to DCA!

[@lucky247365]

I wish young creators like you guys always don't concentrate on S&P500. I know with recency bias , that index has performed well above average, but there is definitely going to be some years where fixed income or internal equities will outperform. US large cap equities are very very pricey right now so it can be detrimental for people to think investing in this index will work out well, even over several years.

[@stephandden]

We personally don't concentrate on, or invest in, the S&P 500 - sometimes we use it as an example, as it's a market index many people have heard of 😊

[@jordanosborne5033]

invest 100% of my paycheque I take 1x a year from corp as a lump sum, we live off my partners income. invest 75% gross income as a household. Western provinces make this easier with cost of living

[@stephandden]

That’s great! Thank you for sharing 😊

[@williamsanchez8222]

I have more money than both of ya combine. It’s crazy how people that are not even millionaires give financial advice lol.

[@stephandden]

Being a millionaire definitely does not mean you should give financial advice! Also, this is an educational channel - we’re making money topics simple, not giving financial advice 😊