Episode 3 of 6
The Gradual Migration
Carla cannot bring herself to invest $480k at once. Her advisor suggests dollar-cost averaging: moving $20k/month from money market into a 40/60 portfolio over 24 months. She models DCA vs. lump sum vs. staying in cash.
Key Insight
Historically, lump-sum investing beats DCA 68% of the time. But DCA reduces Carla's maximum drawdown in the first year from -18% to -8%. Over 24 months, DCA captures 87% of the lump-sum return while cutting her worst-case scenario in half. For Carla, the behavioral certainty of DCA is worth the 13% expected cost.
Model This Scenario