The LSI or DCA Decision: Investing Strategies for the Lump-Sum Averse

Abstract

A recent study finds that a lump-sum investing (LSI) strategy outperforms a dollar-cost averaging (DCA) strategy approximately two-thirds of the time between January 1927 and December 2011 using multiple DCA periods and adjusting for risk. This study extends these findings by examining other risk adjustment measures as well as analyzing shorter DCA periods and timing considerations. Focusing on the US stock market for the past 20 years, the LSI strategy does not dominate DCA as strongly as the prior results indicate. Instead, the decision is sensitive to the DCA duration, the timing of strategy implementation and the risk-adjustment method considered.

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Document Details

Document Type
Technical Report
Publication Date
Apr 11, 2013
Accession Number
AD1022278

Entities

People

  • Brian C. Payne
  • Jeffery S. Bredthauer

Organizations

  • United States Air Force Academy

Tags

Communities of Interest

  • Human Systems

DTIC Thesaurus Topics

  • Air Force
  • Business Administration
  • Commerce
  • Department Of Defense
  • Descriptive Analytics
  • Economics
  • Finance
  • Investments
  • Monetary Policy
  • Money
  • Security
  • Statistics
  • Students
  • Test Methods
  • Uncertainty
  • United States
  • United States Air Force Academy

Readers

  • Computational Modeling and Simulation
  • Defense Acquisition Program Management
  • Economics