VIDEO: Should investors phase their investments or simply invest in one go?
It depends. Standard financial analysis says phasing an investment over time is suboptimal. If you focus on only your investment outcome, investing a lump sum immediately lets you construct the best portfolio you can today; slowing the process by phasing an investment just keeps you in something other than your best portfolio until you are done.
However, behavioral finance provides a different perspective. Because of the difference between the way people typically react to errors of omission (not buying and stocks went up) and errors of commission (buying and stocks fell), phasing an investment may give investors a better investment experience.
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