300k to invest, lump sum or dca? VWCE or VUAA?

[saharali1991]

I have 300k currently in XEON ETF, so giving a fixed 3.9% yearly (subject to change based on €STR).

I have an horizon of 15 - 20 years so I would like to move them to either VWCE or VUAA (sp500). I can add about 2k or 2.5k every month.

What do you recommend? Should I go all in right now at all time high or spread the risk by doing dca for the upcoming months?

It looks to me that we are super high right now, like VWCE is already up 11% ytd and I saw that the average cagr should be 8%.
I would not really like to go in and already be down by a lot after a few weeks. I know that it doesn't matter in the long term but it would bother me nonetheless to lose that 3.9% I have now because of bad timing.

Edit: thanks to everybody for all the recommendations! I also appreciate the consideration of the emotional aspect and how to ignore/overtake it!

 

[dowthut]

@saharali1991 If you would feel bad about going down, then do DCA, eg across a 12 month period. Statistically you would probably be a little bit worse off but investing is also about emotions and discipline, so do what works for you.

 

[luther9]

@larryzz

Statistically Lumpsum wins 2 out of 3 times.

most of these "studies" i've seen assume 0% yield on uninvested cash - which makes quite a bit of a difference given you can easily get 3-4% atm.

 

[jhm59]

@luther9 Exactly!

 

[gjridley]

@luther9 Very good comment. Also I prefer DCA a lump sum just because it feels a bit more "right" to my mind, and that's also an important factor to consider imo.

 

[donevemar]

@larryzz You earned less because you took the less risky approach.
The risk of earning less money than you could is not a thing.
Now imagine if market was bearish instead. You would have lost a ton. That's risk.

 

[jlchoa]

@larryzz I would say the right answer depends on amount already invested in snp500 or other correlated assets (eg a house).

If new investment is less than 20-50% of existing investment amount, then lump sum. Otherwise DCA.

 

[meshaa]

@saharali1991 150k lump sum, 150k DCA over 12 months

 

[chipsj15]

@saharali1991 Lump sum beats DCA most of the time. Go VWCE.

 

[xaara]

@chipsj15 Problem is how much y get rekt on the "few other times". So I would stick with suboptimal DCA

 

[curtis697]

@xaara I always read that lumpsum beats DCA, but does it do so at the same risk level? Returns mean nothing without a risk level attached.

In addition to that, cash can pretty easily get a save 4,5% return too.

 

[grace1]

@saharali1991 It's likely that you will end up better off if you invest everything now. But I know that it's hard from a psychological standpoint to pull the trigger, so you can DCA over 3-12 months. Whatever you do, make a plan and commit to it, without slacking, as that will likely cause even more loss for you.

 

[cheyanne]

@saharali1991 If you are investing with a long term horizon, why do u care if in few weeks you are negative?

 

[saharali1991]

@cheyanne You're absolutely right. I think it comes down to the emotional aspect of seeing the red for a short - mid term when it could have been avoided (or not) if you know what I mean.

Let's say that with 300k, a drop would be felt more painful than if I was to invest 10k. And maybe not in the long term, but in the mid term, a 10% or 15% difference in average price does have an effect on returns with this amount.

 

[resjudicata]

@saharali1991 Ignore this emotion. You know the maths. You don't need the money for 15 years All in now.

 

[saharali1991]

@resjudicata You are right.

 

[cheyanne]

@saharali1991 If a drop is painful than I suggest a different asset allocation stock/bond

 

[ezrasnumberonefan]

@saharali1991 Both VWCE and VUAA are solid options (one might say VUAA is a bit more aggressive with bigger potential but at the same time a bit more "volatile" compared to VWCE). I would prefer VUAA (due to my risk tolerance).

I would suggest a combination of both (you cannot predict the future so you can't and should not try to time the market).

Invest 100K (we are all ATH).

Then in a period of 8-12 months DCA the rest.

 

[veni]

@saharali1991 VWCE
Lump sum

 

[resjudicata]

@veni right answer.