Whether it’s a work bonus, inheritance, or proceeds from selling a business, receiving a large sum of money can leave you wondering, “What do I do with it now?” It’s natural to feel a bit stuck—especially with the market going through its usual ups and downs. Do you invest it all at once, or spread it out over time?

This is a common question, and honestly, it’s understandable. We all worry about making the wrong move—invest too soon and the market might drop; wait too long and you could miss a rally. But there’s no need to over-complicate it. Let’s break down your options.

Start with Your Goals

Before diving into the numbers, ask yourself: What do I want this money to do for me?

If you’ve got short-term goals, like paying for your kid’s college tuition in the next few years, you may want to lean toward more stable, less risky investments—think bonds, bond funds, or CDs. These are less likely to be impacted by the market’s short-term swings.

On the other hand, if this money is for long-term goals, like retirement, then putting it into the stock market might make sense. Over the long haul, markets tend to rise, despite the short-term ups and downs.

Lump-Sum vs. Dollar-Cost Averaging

Now, should you invest all the cash at once or spread it out?

Lump-sum investing gets all your money into the market right away, which could be great if the market’s on the rise. But no one can predict the future, and there’s always a chance the market dips right after you invest. If that possibility stresses you out, dollar-cost averaging (DCA) might be more your speed.

With DCA, you invest a set amount regularly—say, $1,000 a month for a year. When prices are high, you buy fewer shares; when prices drop, you buy more. It’s a steady approach that smooths out market fluctuations over time.

However, here’s the kicker: research shows that lump-sum investing tends to outperform dollar-cost averaging about 68% of the time. So, if your main goal is maximizing returns, lump-sum might be the way to go. That said, the difference in returns between the two strategies isn’t massive, so if dollar-cost averaging helps you sleep better at night, it’s worth considering. After all, the last thing you want is to panic and sell when the market dips.

The Bottom Line—Don’t Wait

Whether you go with lump-sum investing or dollar-cost averaging, the most important thing is not to delay. Holding onto cash means missing out on potential growth from stocks and bonds. And trying to time the market? That’s a tough game to win.

In fact, studies show that average investors who attempt to time the market often miss out—by as much as 5.5% compared to just sticking with the S&P 500. So, whatever you decide, get started. Both approaches will help you benefit from the market’s long-term upward trend, which is key to achieving your financial goals.

Need help figuring out which approach works best for you? Reach out, and we’ll walk through it together.