Big idea: You can invest all at once, or slowly over time. Both approaches may work — it depends on what feels right for you.
The two main strategies when it comes to investing are: lump sum investing and dollar-cost averaging. Both approaches can be helpful when investing.
Lump sum investing
Lump sum investing means investing all your available money upfront.
People choose it because:
- their money spends more time invested (more time in the market)
- it’s simple (one decision)
- markets often rise over long stretches
But it can feel emotionally intense if the market dips soon after.
Dollar-cost averaging (DCA)
This means investing smaller amounts regularly — weekly, fortnightly, or monthly — regardless of what the market is doing.
People like DCA because:
- it smooths out ups and downs
- it removes timing stress
- it creates a steady habit
- it feels calmer during volatility
If you invest in regular intervals, chances are you are using the DCA strategy.
Think of it like this:
- Lump sum is like jumping into a cold pool.
- DCA is like wading in slowly.
Both get you in the water. It’s just about what approach suits you better.
A blended approach
Some people invest a portion upfront, then DCA the rest.
This gives you exposure now
and
a steady rhythm to build your investing habit.
Others like to DCA consistently, and when extra money comes their way — a raise, a bonus, an inheritance — they simply add a lump sum on top.
Why should I care?
Because understanding DCA and lump-sum investing gives you a strategy — not guesswork. It helps you stay invested, avoid the temptation to tinker, and step away from impulsive, speculative day-trading.
The right method is simply the one that keeps you investing for the long haul.
Try this today
If you had $1,000 to invest, how would you feel putting it all in today?
How would you feel splitting it into $250/month for four months?
Your comfort is your clue as to what you should do.
