Fri Sep 20 2024, by Tyler Gardner

3 Reasons Not to Dollar Cost Average a Lump Sum in 2024

Here are three reasons why I would not dollar cost average a lump sum of money into the markets in 2024. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to help you make informed investment decisions.

1. Market Statistics Favor Immediate Investment

Statistically, the market rises 77% of the time over a one-year timeframe. Do you really want to bet on the 23% chance that it’s going to drop? Odds are you’re buying shares down the road that will be more expensive than they are today.

2. Cash is Depreciating

Always remember that any cash on the sidelines is depreciating at a rate of about 3% per year unless you’re holding it in a money market fund or a high-yield savings account. Just because it’s not in the markets doesn’t mean it’s safe or a positive store of value.

3. Psychological Impact of Cash

And this one is just personal to me: when I invest my money, I psychologically say goodbye to it for a set period of time. But when I have cash, I can always find some reason to spend it. Unfortunately, it’s usually not for something that builds wealth, but more like, “Dang, I need that new Lululemon gear!” It’s incredibly comfortable to have cash on hand, and you can’t argue with that.

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