Re:I don't want to work very hard
by Retric on Tuesday December 16, 2008 @12:17PM
(#399673)
If you have a lump sum to invest then waiting to invest it to use "cost dollar averaging" is not really a great idea.
However, if you compare your rate of returns over 30 years with the best and worst possible lump sum investments vs your rate of return from consistent inflation adjusted investing over 30 years the peaks and overall risk is far lower and the average expected return is higher.
No approach can consistently beat the market investing lots of money over the long term. But some R/W profiles are better for small investors looking for a safe retirement than others. I would suggest most people start young and aim for a 98% chance to hit 90% of their inflation adjusted salary at 65. Getting there sooner is great, but not getting their at all is really bad so trying to time the market is not helping your odds.
However, if you compare your rate of returns over 30 years with the best and worst possible lump sum investments vs your rate of return from consistent inflation adjusted investing over 30 years the peaks and overall risk is far lower and the average expected return is higher.
No approach can consistently beat the market investing lots of money over the long term. But some R/W profiles are better for small investors looking for a safe retirement than others. I would suggest most people start young and aim for a 98% chance to hit 90% of their inflation adjusted salary at 65. Getting there sooner is great, but not getting their at all is really bad so trying to time the market is not helping your odds.