To Dive in or Wade in?

This month we are linking to a great article in the New York Times that looks into the issue of dollar cost averaging vs plunging all in to the stock market and puts the two scenarios through historical tests.  The results are pretty compelling and follow our general philosophy.

The article indicates that given time the stock market is expected to rise and thus absent of other issues its best to invest all money slotted for the stock market at once as opposed to easing in.  While there may be other, more personal, reasons to stagger investments, if the time frame is long enough we agree that the best course of action is likely to dive right in.

 

Index Performance                                      Aug.       YTD     Trl 1 yr.        

US Stock (Russell 3000)                                    4.20%     9.23%     24.74%
Foreign Stock (FTSE AW ex US)                      0.57%     5.60%      18.37%
Total US Bond Mkt. (BarCap Aggregate)        1.10%      4.81%        5.66%
Short US Gov. Bonds (BarCap Gov 1-5 Yr)     0.33%     0.89%        1.32%
Municipal Bonds (BarCap 1-10yr Muni)          0.75%      4.14%       5.83%
Cash (ML 3Month T-Bill)                                   0.00%     0.03%      0.05%

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Past performance does not guarantee or predict future results. You should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Wealth Management, LLC. This information was gathered from reliable sources but we cannot guarantee accuracy. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated.
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