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Author: hirundo Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Re: How to invest a Large Lump Sum Date: 12/28/2007 5:54 PM
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Joe,

I agree with the idea that it will be safer to split up the purchases
over time, rather than making them all at once.

Having said that, it seems to me that there are 2 aspects of the timing
of the purchases, that would affect safety.

#1 is: how many months should elapse between the first and last purchase?
#2 is: how many purchases per month?

Let's take 36 months as your answer to #1, for the sake of discussion.
Question #2 would then arise: is it just as safe to make only one purchase per month, as it would be to make one purchase per week,
or even one per day?

It seems to me that you might want to trickle the purchases, one per week,
each about 1/156 of your (pertinent) money, for a total of 3 years.

To explore/test how much the purchase-cycle-length affects smoothness of results, would require some historical data, and some number crunching.
If you're not interested in doing that, maybe you would simply pick
a cycle length that 'felt safe' to you, whether it was once a day,
twice a month, or whatever.

If the rationale for not buying everything
in one fell swoop is to raise your chance of more closely mimicking
the long term market results, then the chief reason for _not_ making
tiny daily purchases would be increased costs of trading...
which might or might not be a big factor,
depending on your choice of brokerage and investment
instrument (mutual fund, ETF, Berkshire A, or whatever)

hirundo
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