Lump sum or monthly? What to do with money you already have

If the money is invested in a fund you intend to hold for decades, putting it in at once is the better bet. It wins in roughly two periods out of three, for a simple reason. Markets have risen more often than they have fallen, so money held back in cash usually misses some of that rise.

Splitting the money into monthly parts is the worse bet on average and the safer one in the worst case. If the market falls sharply in the weeks after you invest, the split version buys part of its position cheaper and ends ahead.

So the choice is between a higher expected result and a smaller maximum regret. Both are legitimate. Either beats leaving the money in a current account until the moment feels right, which is what most people who cannot decide end up doing.

This guide is about money you already have. An inheritance, a bonus, the proceeds of selling a flat, savings that built up in a deposit account over years.

It is not about the €300 that leaves your salary each month. That money cannot be invested earlier than it arrives, so investing it when it arrives is simply investing it as soon as possible. The monthly plan has its own guide. The confusion between the two is common because both get called cost averaging, and the arguments for one get borrowed for the other.

One thing comes before either. Money you may need within a few years does not belong in equities at all, invested at once or in parts, and an emergency fund in cash is what lets you leave the rest alone during a bad year. Everything below assumes the sum in question is what remains after that.

Take €30.000 and a fund returning a steady 7% a year. Invest it in one go, or in three, six or twelve equal monthly parts with the first part going in on day one. The money not yet invested sits in cash at 0%.

Under a steady return, investing at once has to win, because every euro spends longer in the fund. What the table shows is how much the waiting costs.

Notice the last column. Once the split is complete both portfolios hold the same fund and grow at the same rate, so the gap opened in the first year never closes. It stays at roughly the same percentage and grows in euros as the balance does.

Interest on the waiting cash narrows the gap without closing it. At 2% a year on the uninvested part, the twelve-month split ends the first year €698 behind instead of €974.

A steady 7% is a planning device, and in a world with no bad months splitting could only ever lose. The real question is how often a real market punishes investing at once, and that needs data.

The most useful study is Vanguard's from February 2023. It compares investing at once with splitting the same sum into three to six equal monthly parts, all in equities, with the waiting cash earning no interest. It then checks which approach held more money one year later, across every rolling one-year window in the data.

The euro results are the ones that matter for a reader here. On the MSCI World measured in euros, from 1998 to 2022, investing at once beat a three-month split in 66,4% of periods. On the MSCI Europe over the same years it was 66,5%.

Two details in the euro figures cut against the usual telling of the story. They are lower than the long US dollar series, where investing at once won 67,7% of the time from 1976 and 72,6% against a six-month split. And in euros a longer split did not lose more often. Against the MSCI Europe the six-month split was beaten 65,4% of the time, slightly less than the three-month one. The euro series covers twenty-five years against the dollar series' forty-seven, and a shorter history moves around more.

Paying interest on the waiting cash changes little. With US Treasury bill interest added, investing at once still beat the three-month split 65% of the time in the all-equity case.

Splitting wins when the market falls soon after the first purchase. The later parts buy units cheaper, and when prices recover those cheaper units recover with them.

Two stylised years show the mechanism. In the first, the market falls 20% over three months and climbs back to where it started by month twelve. In the second, it rises steadily by 20% over the year. The same €30.000 goes in at once, in three parts, or in twelve.

In the bad year, the investor who went in at once finishes exactly where they began, while twelve monthly parts end €3.482 ahead. In the good year the order reverses and investing at once is €2.931 ahead of the twelve-part split. The three-month split sits between the two in both years, which is the point of keeping a split short.

Vanguard's historical figures show the same shape across many real years. At the 5th percentile, the worst one year in twenty, $100.000 invested at once in global equities was worth $82.947 a year later and a three-month split $85.906. At the median, investing at once came out 2,2% ahead.

A plan you abandon in its first bad month loses more than either choice. Someone who puts €30.000 in at once, watches it become €24.000 by spring and sells, has turned a temporary fall into a permanent one. Had they split the money and stayed, they would have done better than both.

Vanguard models this directly. For an investor who weighs a loss more heavily than a gain of the same size, splitting came out as the preferred strategy for the moderately and the very conservative profiles, despite its lower expected result. The paper's own conclusion is that the choice between the two makes only a marginal difference compared with keeping a sum in cash indefinitely.

So the honest test is personal. If a 20% fall in the first months would make you sell, split it. If it would annoy you and you would hold, investing at once is the better bet and the split buys you little.

Splitting only works when it is a schedule. Once it becomes a series of decisions, each month offers a reason to wait, and the plan drifts into the cash position it was meant to replace.

Three, because they come up every time.