Lump Sum Investing

Lump Sum Investing refers to the investment strategy where an individual invests a large amount of Money at one time, rather than spreading it out over multiple smaller investments. This approach contrasts with dollar-cost averaging, where the investor regularly invests smaller amounts over time.

Examples:

• Investing $10,000 in a mutual fund in January rather than Investing $1,000 each month over ten months.
• Using a $50,000 inheritance to purchase Shares of Stock all at once instead of buying Shares gradually.

Cases:

• Case 1: An investor believes the market is undervalued and chooses to invest a lump sum, resulting in substantial gains if the market rises after the investment.
• Case 2: An investor hesitates and waits for a better opportunity, leading to missed potential gains if the market rises while they delay their investment.