3 ms·
It seems like a distinction without a difference. The investing outcome is identical, so why does it matter that your job pays you out over the entire year.
by kareemsabri 4y ago
It seems like a distinction without a difference. The investing outcome is identical, so why does it matter that your job pays you out over the entire year.
- mbesto 4y agoThe difference is the following: Scenario 1 [S1]: I have $120,000 in cash. Scenario 2 [S2]: I expect to make $120,000 in cash over 12 months, equally once a month On Day 0... S1 - I have two choices: put all $120k in the market ("lump sum") or DCA is over 12 months. S2 - I have no choice but to DCA it. If I choose to DCA in S1, then I could have made more money by lump summing (depending on market conditions). This is basic TVM.