When you get your bonus do you throw all of it into your mutual fund right away or do you dollar cost average? I dollar cost average throughout the year so I feel very comfortable liquidity-wise having cash on hand. But I’m not sure if the opportunity cost is way too high with that. What do you guys do? It just seems abit scary to dump all your bonus at one go after receiving it.
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You spend all your bonus money on ETFs immediately? Or you keep a chunk of cash in your brokerage to invest as and when?
If you're investing long term you don't need to dollar-cost average over a year but you could if you want. Because after a couple years the difference in gains is relatively small. I keep my brokerage 95% invested, e-fund in my checkings (~6mo. expense). No need to hold a chunk of cash heavier than that because you can always withdraw from your brokerage if you need to.
Exactly. The math favors lump-sum, but it's probably fairly marginal until you have a serious chunk of change. It would make more sense to be invested at most times, unless you think cash is going to outperform, but that's on you.
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