One Time Investment Vs. Initial + Monthly Investment?

Consider the following two cases, in a 'Mutual Fund' investment:

1. I begin investment with one lump sum amount say $5000 and no more in the monthly investment in the subsequent months
2. If I begin, Investment with $2500 (initial investment) and add $100 per month in cash month, considering the rise and fall of the fund price, which will give better result?

Assume all gains and dividends and invested in the funds.

I understand the difference in the initial investment but I want to predict the better result, in terms of gains NOT in terms of total growth.

Please assume, any 'High Return -High Risk' International funds, where market up and down are very common and frequent.

It depends. If right after your initial investment, a bull market follows, the lump sum investment will perform better. However, if a bear market occurs after your initial investment, the dollar averaging strategy will perform better because you would accumulate more shares. Your strategy should take into consideration the risk you're willing to take and your investment horizon. If it worries you that share prices would immediately drop right after your initial investment, it would be better to go with the initial + monthly investment strategy. In today's market, when the Dow Jones has been hitting record highs, this may not be a bad strategy.

The answer to that is it depends. If I read your question correctly you can either invest $5,000 today, or you can invest $2,500 plus $100 a month for the next 25 months.

Bottom line is no one knows the answer to that questions. If the market continues up for the next two years then you are better off investing $5,000 today. If it goes down then the second alternative.

The first thing to realise about mutual funds is that 80% of them fail to beat the market.

For long term investing check out the results obtained by the stocksmonthly system.

Also read the article entitled what's wrong with mutual funds on fool.com

#2 is the way to go. This investing strategy is called "Dollar Cost Averaging". If you go to the link provided and read this article you will understand why this is a very smart way to go.
http://beginnersinvest.about.com/cs/newi...

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