The Personal Finance Podcast How to Invest $1 Million (A Simple Strategy To Invest a Lump Sum)
Aug 4, 2025
Discover effective strategies for investing a sizable lump sum, including the critical aspects of planning and informed decision-making. Learn how to balance personal goals with risk tolerance, weighing the benefits of lump sum investing versus dollar cost averaging. Dive into portfolio construction with a focus on asset allocation and diversification, while staying mindful of management fees. Gain practical insights on managing windfalls wisely, emphasizing education and disciplined long-term planning for financial success.
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Pause Before Investing
- Pause and reflect for 3 to 6 months after receiving a lump sum before investing.
- Use this cooling off period to clarify the purpose, timeline, and your risk tolerance for the money.
Lump Sum Beats Dollar Cost Averaging
- Lump sum investing statistically outperforms dollar cost averaging about 70% of the time.
- Markets tend to rise over time, so earlier investment maximizes compound growth potential.
Use Dollar Cost Averaging for Comfort
- Choose dollar cost averaging if market volatility causes you emotional stress.
- Staying invested long-term beats trying to time market fluctuations.
