Is it a bad idea to invest all my life savings at once in the market?

I have around $300K to invest and I’m thinking about a mix of ETFs and possibly a couple of individual stocks. My main concern is whether I should spread out my investments to protect myself from market movements, or should I invest now and let time work its magic? I’m planning for a 5-10 year investment horizon. Any advice would be appreciated.

Technically, it’s best to invest everything at once, as soon as possible. But personally, I feel more comfortable spreading it out a bit. This way, you can match your risk tolerance with your investments.

Nothing worse than feeling confident and putting all your money in the market, only to see it drop 20% the next week, and then you can’t sleep for months.

Imagine that $300K turning into $250K in just one week. If that freaks you out, you might not be ready to invest that much.

Edit: Interest rates are still decent in money markets. I’d suggest putting part of the $300K into index funds, and keeping the rest in money markets. Then slowly shift money from money markets to index funds over time. If the index funds go up, great, you’re making money. If they go down, it’s even better because you can buy more with your remaining funds.

Also, what are your retirement plans like? You should put $7K into a Roth IRA right now and then another $7K on January 1st. That way, you can get tax benefits on those funds. Just invest that $14K in VOO.

@Orin
I see your point, but historically speaking, even with big drops, the market usually recovers. What I find scarier is my money losing value because of inflation.

Lane said:
@Orin
I see your point, but historically speaking, even with big drops, the market usually recovers. What I find scarier is my money losing value because of inflation.

That’s true for some people. If you can’t sleep at night and it would seriously affect your life, then it’s not worth taking that risk. Also, it’s unclear whether the original poster has an emergency fund. Having an emergency fund of $30K-$50K is important as a safety net.

This is what gives me a higher risk tolerance in the market — I have a solid financial base to fall back on, so I can sleep at night.

@Orin
Yeah, I see what you mean. I was assuming they had a safety net if they’ve got $300K, but you never know.

@Orin
I had a large sum from selling a house and didn’t feel confident going all in. That turned out to be a mistake, but it worked out because I just wasn’t comfortable doing it all at once.

Maybe you should get a job before dumping it all in the market.

Rowan said:
Maybe you should get a job before dumping it all in the market.

Unnecessary comment, and it’s not relevant to the topic.

Noor said:

Rowan said:
Maybe you should get a job before dumping it all in the market.

Unnecessary comment, and it’s not relevant to the topic.

This isn’t your personal diary, it’s a public forum.

@Jonah
Sir, this is a Wendy’s!

@Jonah
Why are you guys being rude? The person is just asking for advice.

Rowan said:
@Jonah
Why are you guys being rude? The person is just asking for advice.

I mean at least Immediate-Run’s comment was more personalized for the original poster… before they dismissed it.

But yeah, this topic has been talked about so much, a quick search on this forum would have answered it. Time in the market vs. timing the market, etc.

But maybe I’m just being a grumpy old man.

Basically, you’re asking if you should try to time the market. You shouldn’t. If you know you want to invest all this money, just do it. Then leave it alone.

Don’t let the perfect (investing at the perfect time) be the enemy of the good. Start investing as soon as you’re comfortable with it.

The truth is this:

If you have a steady income, you should dollar-cost average.

If you have a lump sum, pay off debts first, then buy equities.

During a bull market, buy the S&P 500.

During a bear market, buy individual stocks.

Your issue is the 5-10 year time horizon. That suggests you want the money for something sooner than later. Right now, we’re at historic highs. This could continue, but with the new administration, there’s a lot of uncertainty. I’m not sure the next 4 years will be good for the market in the short term. There are still high-yield savings account options. Figure out what you’ll need in 5 years. If you didn’t need it for 30 years, the conversation would be different.

It’s up to you. On average, the math favors lump-sum investing. The market trends up over time, so getting in all at once is generally better than spreading it out.