Question about when to invest for the pool of funds?

[Motu]

I have a question about how much and when to invest the funds say into a Vanguard ETF. Would appreciate advice around the following questions please:

1. How many months of monthly expenses would you recommend I keep in the bank for a rainy day?

2. Assuming I have set aside the amount mentioned above in the prior question and am left with 120K to invest and would like to do so in a variety of index funds, should I be splitting that 120K into monthly investments of 10K / month for over the course of a year or say maybe 3/6 months? Or should I invest the money all at one shot?

Many Thanks.

[Jeremy (Jeremy Schneider)]

Hey @Motu!

@Motu

1. How many months of monthly expenses would you recommend I keep in the bank for a rainy day?

I would prioritize your money based on the Phases of Investing here:

How to prioritize your money (The phases of investing)

@Motu

Assuming I have set aside the amount mentioned above in the prior question and am left with 120K to invest and would like to do so in a variety of index funds, should I be splitting that 120K into monthly investments of 10K / month for over the course of a year or say maybe 3/6 months? Or should I invest the money all at one shot?

What you’re asking is the difference between “lump sum” investing and “dollar cost averaging”. Historically, lump sum makes you more money on average, because the market usually goes up. Dollar cost averaging over a year, for example, doesn’t do anything magical, except get you the average price for the year instead of today’s price. More often than not today’s price is lower than the average price of the following year. But if you’re super anxious about market volatility and you think dollar cost averaging will help you sleep better and avoid panicked bad decisions like selling, then it’s totally fine to do it that way.