Lump sum vs. DCA?

Dear Mustachians,

WestCH, long-time lurker and first-time poster here.

I’m 32y old, not married, no kids and worked the last five years in the financial industry as a HNWI client advisor for an international Swiss bank. Beginning of may this year, I will leave my current employer and make the step into self employment as an independent asset manager for a multi family office.

With the change of job comes the fact that I will have my pension fund paid out to a vested benefits account. I do not have to transfer my previous pension fund assets to my new employer’s fund. For this reason, I have opened a vested benefits account with valuepension and plan to have the money invested long-term using a 100% equity strategy.

The (emotional) challenge
Now I have the question of whether I should invest the money through a lump sum or steadily increase the equity allocation over the next few months. Valuepension does not allow cash allocation, so I would have to ramp up the strategy over the months from 100% (or 80%) bonds to 100% equities (rebalancing takes place on a monthly basis with valuepension).

Despite my professional background, this is an emotional decision for me. Because theory teaches us that 75% of the time you are better off with a lump sum than investing the amount in a staggered manner. But my professional experience in the past has shown that most investors also prefer the staggered approach to a lump sum investment, although there is no empirical reason for this. Additionaly, just going by volume, this is my largest investment “pot”.

How would you go about it?

To complete the context, you will find below an overview of my assets:

  • Savings Account: CHF 55’000
  • Private account: CHF 19’000
  • Swissquote: CHF 8’000 (VWRL, UBS ETF SLI) → I just started to invest this month, because I was not allowed to have a custody account with other providers than my employer before and I was not willing to pay the fees.
  • 3a: CHF 39’000 → transferred to finpension, 85% equities as of next week
  • 3a: CHF 3’000 → Second account opened as of last week, also at finpesion. 85% equities
  • 2a: CHF 66’000 → planned to invest 100% in stocks as this money will not be touched even for home ownership.

Hi WestCH and welcome to the forum!

This decision is often emotional. Even though it is true that the lump sum is theoretically the correct one, investing exposes you to the risk of selling in panic in case the markets experience turbulence.

If you feel emotional about it, this speaks in favor of spreading the investments over a few months or a year. This could give you more peace of mind because if it goes up, you feel good about the stock part and if it goes down, you feel good about the opportunity to increase it. It maximizes the chances that you will stick to your plan.

My answer would have been different if a pension plan gave full exposure to the ups and downs of the market, then I would simply have put it all again invested with the same strategy to avoid a disruption of the exposure.

Finally, a remark: if making this decision is emotional to you, you may want to consider whether 100% stocks is the correct allocation for you or if it should be adapted.

Note that I am not a financial advisor, this is only my personal way of thinking about it, and why I also tend to spread over a few months when there is new money to invest.

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“All-in” lump sump - if your favourite benchmark index is more than 15% below its all-time high.

DCA otherwise.

Just :gorilla: throwing out a simple rule without overthinking it.


Rational thinking: if your purpose is to have your pension fund fully invested in a few months and you consider riding the rollercoaster until retirement, then a market downturn while lumpsumming would have similar psychological effects than when you’d have your money fully invested later on. If you can stomach a big drop later on, you should be able to stomach it now.

Rational thinking: manage your portfolio as one big bag of assets. What would your target global allocation be? Then distribute the assets into your accounts taking into accounts what seems to make the most sense. You can buy stocks in your pension fund and sell them in your 3a/taxable to get acces to liquidity. Money is fungible. Your current plan would have you at something like 58%/42% stocks/stable assets, does that match where you’d want to be?

We’re not speaking about rational thinking, by your own admission, this is emotional for you. Go for what works for you, being invested at your desired asset allocation in a few months and being able to hold that allocation in the future is what matters.

Why 85% stocks in your 3a assets? (That is, what is the reasoning that lead you there and could you apply it to your portfolio as a whole?)

Sleeping well at night is important (the most), that said given the amount and the fraction of total net worth, going all in doesn’t seem very risky (assuming that’s the allocation you want). And you’d still have many years of contributions ahead of you in case there’s a drop.

But definitely do it in a way you feel good about, it’s going to be more important in the end :slight_smile:

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Because despite your professional background, you’re still human. :slight_smile:


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My target asset allocation is pretty simple: an emergency fund which holds enough cash in order for me to survive one year without a salary (CHF 50’000, or CHF approx. CHF 4’000 p.m.). Whatever is left I want to invest long-term in index funds.

Don’t get me wrong: My only emotional problem is the lump-sum investment. If the market really should drop right after my investment, I am confident that I have the discipline to hold the course and to not change the allocation. I have enough examples from clients who got the shivers after a sudden downturn and switched their current investment strategy to a more conservative one - those clients always regretted their decision.

The 85% stocks in 3a has a simple reason: Up until now, I followed a 75% equity strategy for my 3a (highest possible at my current employer). Since I’ll move my 3a to finpesion, I analysed their proposed asset allocation and deleted foreign real estate (bad historical performance) and Swiss Govt. Bonds (negative yield to maturity). I added those percentages to global and domestic equities (Small & Mid Cap).

I grappled with this question last year when I started to invest seriously. In the end it doesn’t really matter, as long as you do invest and invest for the long-term. In the long-term, time in market beats timing the market, so the purchase price doesn’t matter so much. Many people conclude that this means lump-sum, but since it doesn’t matter so much, it could also mean, do what you prefer emotionally. I prefer DCA, so that’s what I have been doing.


Yes, it does matter. Your statement is a contradiction in terms: Investing later (DCA) vs. time in the market that matters :wink:

I guess you all know Is Now the Best Time to Invest? | Common Sense Investing with Ben Felix - YouTube

→ DCA is just a form of “taking risks later” and missing “time in the market”

But I can definitely relay to the emotional factor, though (but I don’t try to rationalize emotionality :wink: )

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When unsure about DCA/lumpsum, there is a simple way to get to the right answer. Ask yourself what you would do if this money would already be in the market (doesn’t matter for how long).

Would you A) keep it invested and stick to your monthly savings/investments or B) sell it all and DCA it back into the market?

If A → lump sum.
If B → DCA.


In my opinion DCA versus all-in are answers to different questions.

There is a lot of talk about DCA and time-in-the market regarding the problem “I would like to invest but I don’t know when the market will be at its lowest point” so we prefer to answer “there is no point in trying to time the market, always buy at a given preset date regardless of price (DCA)”.

While your situation is different. You are investing money that you already have ready. In this case, in my opinion, all-in is the best method, if your investment is long term, because DCA I do not see what advantages it may have, if not the lack of exposure in the market. In case of black swan, neither method can help you.

And to be honest, unless you are done with earning for life (which I assume you are not), you will be “DCA-ing” one way or another, whether you lump sum this amount or not. :slight_smile:

Perhaps compare the amount to your yearly savings, that might give you another perspective on the significance of worrying about this decision.
If you will have another 60k saved in a year, then why bother DCA-ing these 60k.

I setup a mini-approach in my IPS with windfalls depending on their proportion to total portfolio (e.g. less than 10% - lump sum it in, otherwise break it into pieces and go stepwise), and act accordingly.
Because I simply “feel” better not dumping in significant money at once; even though it might be “irrational”.


Haha, kind of, yes. But in the long-term, not really. If you invest for 10 years and more, it doesn’t matter so much whether a part of your money was invested a bit later or not.

It matters much more that you start to invest asap and stay invested. So instead of spending too much time to think about whether to lump-sum or DCA, just invest a part now and take it from there. Most of the time, DCA is financially inferior, but not always (not in flat or falling markets). And the comparison omits that people might start investing later with lump-sum, because the decision is more difficult.

I had the same decision to make All in with a bang?

The process of thinking through the asset allocation (instead of: I am young, think long-term and go all equity) was for me the “enlightening” aspect. → I increased the cash-position as I sleep better with it.

After having decided on the asset-allocation and the amount for the emergency fund, I did not longer struggle and made the lump-sum payment.


I too would say put it all in. Don’t waste time, as others have said, “it’s time in the market, not timing the market”.

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