RetireJapan

Hi guys!

What's the general thinking around here on whether it's better to max out NISA at the beginning of the year with a lump sum investment, as against dollar cost averaging on a daily or monthly basis throughout the year?

P.S. My NISA portfolio is a one fund portfolio of Rakuten's VT+BNDW wrap fund (楽天インデックスバランスファンド（均等型）).

Can... worms everywhere...

My personal thinking is that a lump sum is statistically better in terms of long-term gains, but if you invest it all just before a crash or at the start of a bear market then you'll be wishing you'd left some behind to buy at lower prices. That's why I buy monthly ("dollar cost averaging") and will continue to do so. But if you don't need the money for at least ten years and don't care about ups and downs then yeah, might as well lump sum it.

The data is pretty clear, lump sum wins by about a 2/3 margin in most scenarios.

Do what is best for you. I plan to lump sum in January, in 5 installments between both NISA frames.

This year will exhaust my taxable, and I will be on tsumitate street from 2026 onwards.

Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by regular tsumitate, avoid them

No more; and by tsumitate, to say we end
The heart-ache, and the thousand natural shocks
That lump sum is heir to? 'Tis a consummation
Devoutly to be wished.

In 2024 I DCA'd my growth portion which was stupid and I missed out on some good upside. So next year I will go all in on the growth portion in January and, due to the inviolable nature of Murphy's Law, will watch the stock market immediately tank for the rest of the year.

eyeswideshut wrote: ↑Tue Dec 17, 2024 4:23 am In 2024 I DCA'd my growth portion which was stupid and I missed out on some good upside. So next year I will go all in on the growth portion in January and, due to the inviolable nature of Murphy's Law, will watch the stock market immediately tank for the rest of the year.

I think "stupid" is a bit harsh No one knows what the stock market will do at the start of the year. Best to have a plan (DCA or lump sum) and stick to it. I wonder if there are any stats for regularly switching to DCA after a bad year and lump sum after a good year? My feeling is that this will result in poorer returns over time, as well as being more hassle and more subjective (what is good and what is bad?).

eyeswideshut wrote: ↑Tue Dec 17, 2024 4:23 am In 2024 I DCA'd my growth portion which was stupid and I missed out on some good upside. So next year I will go all in on the growth portion in January and, due to the inviolable nature of Murphy's Law, will watch the stock market immediately tank for the rest of the year.

Obviously it’s impossible to predict such things.

But also. Which exact date in Jan?

Moneymatters wrote: ↑Tue Dec 17, 2024 9:17 am

eyeswideshut wrote: ↑Tue Dec 17, 2024 4:23 am In 2024 I DCA'd my growth portion which was stupid and I missed out on some good upside. So next year I will go all in on the growth portion in January and, due to the inviolable nature of Murphy's Law, will watch the stock market immediately tank for the rest of the year.

Obviously it’s impossible to predict such things.

But also. Which exact date in Jan?

Ideally, I might wait until eyewideshut's Murphy's Law makes the stock market tank, and _then_, make my own lump sum investment...

ChapInTokyo wrote: ↑Tue Dec 17, 2024 11:25 pm

Moneymatters wrote: ↑Tue Dec 17, 2024 9:17 am

eyeswideshut wrote: ↑Tue Dec 17, 2024 4:23 am In 2024 I DCA'd my growth portion which was stupid and I missed out on some good upside. So next year I will go all in on the growth portion in January and, due to the inviolable nature of Murphy's Law, will watch the stock market immediately tank for the rest of the year.

Obviously it’s impossible to predict such things.

But also. Which exact date in Jan?

Ideally, I might wait until eyewideshut's Murphy's Law makes the stock market tank, and _then_, make my own lump sum investment...

Last year I lump summed my wife's and DCAd mine because Murphy's Law always beats me.

Edit: Just checked and she got 21% growth and I got 16%. We don't have exactly the same holdings but they are similar. So Murphy's Laws still applied in that the one I chose for myself was worse!.

Obviously it’s impossible to predict such things.

But also. Which exact date in Jan?

LOL - I will sell my old 2020 NISA once the markets open after the new year break and as soon as the money is available will buy the exact same funds into the new NISA. So if you wait until mid January to buy you should be golden!