What You're Missing Out on By Dollar-Cost Averaging Your Big Windfall
If you've just come into a whole lot of cash with no plans for its immediate use, you probably know it's best to invest that money. Whether you recently downsized your home, received a significant bonus at work, or just received an inheritance, putting that cash to work in the stock market is one of your best opportunities to grow your wealth.
Investors in that situation often hear advice to dollar-cost average into the market. Instead of investing the lump sum all at once, they may be better off investing a little bit at a time over the course of a year or two. The idea is to hedge against the risk of the stock market going down.
Generally speaking, that's not the best advice for most investors. Here's what you're missing out on by dollar-cost averaging.
Source Fool.com
