What Is Lump Sum Investing?
Investing a large amount of money all at once rather than spreading it out over time.
The Full Definition
Lump sum investing means putting a large sum of money into the market all at once — a bonus, inheritance, or savings windfall — rather than spreading it out via dollar cost averaging. Despite feeling riskier, historical data shows lump sum investing outperforms dollar cost averaging roughly two-thirds of the time, simply because markets rise more often than they fall, and more time invested generally means more time compounding.
Real-World Example
Vanguard research comparing the two approaches across rolling 12-month periods from 1976–2022 found lump sum investing produced a higher ending balance roughly 68% of the time. The exception: if you genuinely believe a downturn is imminent, or the money would otherwise sit in cash you're uncomfortable deploying all at once.