[Excalibur]

My investment is light on stocks. I have a lump sum amount of cash that I want to invest in the market. I am thinking of dollar cost average it monthly into the market over the course of 5 years.

My thinking is that if the market goes bad, within the span of 5 years I should at least be able to catch some of the bottom. If the market continues to goes up, then I'll make some money. The worst case scenario is the market stays flat for 5 years than crash. In that case I get screwed.

Some say if you just put the money all in now, statistically you will come out ahead of dollar cost averaging. My thinking is that I may lose some opportunity for gain, but I get some protection from a steep drop.

Is there something wrong with this strategy?

FYI. All this money if for long term. Hopefully I can hold it for 20+ years. At the most I'll just tap into the dividend.

[Tigre]

(02-15-2016 04:09 PM)Excalibur Wrote:  

The worst case scenario is the market stays flat for 5 years than crash. In that case I get screwed.

One worst case scenario is hyperinflation. This would cause the money you hold in cash to dramatically lose value.

Another worst case scenario is a financial institution crash. You want to make sure your money is fully covered by federal guarantees and not sitting all in the one bank.

[Running Turtles]

I find this article (and site in general) gives good financial advice from a red-pill perspective.

http://wallstreetplayboys.com/how-do-you...two-rules/

Here's the part that's relevant to OP:

Quote:

2) Don’t Predict the Market: Everyone thinks they are smart. Once you realize this, you stop trying to predict the entire global economy and simply dollar cost average. You will *generally* see 5-9% returns over the long run (nothing is guaranteed), but in simple terms “are things going to become more expensive?” if you answer yes (you should answer yes based on 100+ years of history) then all you need to do is buy inflating assets (stocks).

Until you no longer have to work for a living, you cannot break either of these two rules. If you are Financially Independent (FI as the nerds like to call it) then you can dabble in higher risk items. The end.

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In 100% honesty it is taking the will of a thousand marine soldiers to avoid clicking “publish” after the end of the previous paragraph. Why? It really is that simple.Instead of clicking publish lets go ahead and look at all the foolish people who will try and break these rules.

The article goes on to list ways to screw it up. It's a good read and very useful.