How to invest a lump sum of money | Vanguard (2024)

*Source: Vanguard, Cost averaging: Invest now or temporarily hold your cash? (Finlay & Zorn, 2023).

All investing is subject to risk, including the possible loss of the money you invest.

Dollar-cost averaging does not guarantee that your investments will make a profit, nor does it protect you against losses when stock or bond prices are falling. You should consider whether you would be willing to continue investing during a long downturn in the market, because dollar-cost averaging involves making continuous investments regardless of fluctuating price levels.

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochurehere for an overview.

VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.

How to invest a lump sum of money | Vanguard (2024)

FAQs

What is the best way to invest a lump sum of money? ›

Yes, investing a lumpsum in mutual funds can be a good idea for individuals with a significant amount of money to invest, seeking potential market returns and long-term wealth creation.

What is the smartest thing to do with a lump sum of money? ›

Saving with a savings account

Cash savings are always popular with people who want to put away a lump sum and earn interest over a long period of time. This can be a very good way to save for things without taking on bigger levels of risk.

How to do lump sum investing? ›

If you choose to invest a lump sum, don't just put it all in one stock. It's best to find a handful of individual stocks. If you don't want to take the time to do the research, consider buying a mutual fund or an ETF that gives you exposure to a large number of individual stocks.

Where is the best place to put a lump sum of money? ›

Storing your lump sum wisely

A savings account is a common choice, offering a secure place to keep your money while earning some interest. There are several types of savings accounts designed to cater to different needs and goals.

What is the safest place to invest large sum of money? ›

Overview: Best low-risk investments in 2024
  1. High-yield savings accounts. ...
  2. Money market funds. ...
  3. Short-term certificates of deposit. ...
  4. Series I savings bonds. ...
  5. Treasury bills, notes, bonds and TIPS. ...
  6. Corporate bonds. ...
  7. Dividend-paying stocks. ...
  8. Preferred stocks.
Apr 1, 2024

What is the safest investment for a large sum of money? ›

Key Takeaways. Safe assets are those that allow investors to preserve capital without a high risk of potential losses. Such assets include treasuries, CDs, money market funds, and annuities.

What is the best account to put a lump sum in? ›

Put it in a savings account - If you want to keep your money safe and let it earn interest, then a savings account is an option. Discover our savings accounts. Put it in a bank account - If you think you'll be spending money, then you could just keep it in your regular bank account.

Do millionaires keep their money in cash? ›

Many millionaires keep a good chunk of their money in highly liquid assets. The most liquid asset is cash on hand. After which, cash equivalents offer the highest liquidity and act as very lucrative investments.

How do you grow a large sum of money? ›

What You Can Invest a Lump Sum In
  1. Bonds: Bonds are essentially loans to a company or government. ...
  2. Mutual funds: Mutual funds can provide balance in your portfolio as they are often a strong long-term investment. ...
  3. ETFs: Exchange-traded funds (ETFs) are similar to mutual funds as you can invest in multiple stocks at once.
Jul 29, 2023

What is lump sum strategy? ›

Lump-sum investing means that you take all or a large portion of your investable cash and invest it all at once. A lump sum could be $10,000, $50,000, $200,000 or any amount that is large given your situation. You might find yourself with a lump sum for any number of reasons. Perhaps you received an inheritance.

What is the lump sum method? ›

What is Lumpsum. Definition: A lump sum amount is defined as a single complete sum of money. A lump sum investment is of the entire amount at one go. For example, if an investor is willing to invest the entire amount available with him in a mutual fund, it will refer to as lump sum mutual fund investment.

What are the disadvantages of lump sum investment? ›

What are the disadvantages of lumpsum investment in mutual funds? Lumpsum investments in mutual funds lack the benefit of cost averaging and can be subject to market timing risks. Additionally, a large initial investment may lead to higher exposure to market fluctuations compared to periodic investments.

How can I double 20K? ›

10 Best strategies to invest $20K
  1. Pay off debt. ...
  2. Build an emergency fund. ...
  3. Max out your retirement accounts. ...
  4. Invest in an index fund. ...
  5. Invest with a brokerage account. ...
  6. Invest with a robo-advisor. ...
  7. Invest in fine art. ...
  8. Invest in real estate.
Mar 14, 2024

Is it better to invest a lump sum or monthly? ›

Lump-sum investing may generate slightly higher annualized returns than dollar-cost averaging as a general rule. However, dollar-cost averaging reduces initial timing risk, which may appeal to investors seeking to minimize potential short-term losses and 'regret risk'.

Which savings account is best for lumpsum? ›

The amount of interest you'll earn depends on several things, such as how much money you deposit, what the interest rate is and whether that interest rate is fixed or variable. Fixed rate bonds are generally considered one of the best lump sum savings accounts for competitive interest rates.

How can I invest $10000 to make more money? ›

Best ways to invest $10,000: 10 proven strategies
  1. Pay off high-interest debt. ...
  2. Build an emergency fund. ...
  3. Build a CD ladder. ...
  4. Get your 401(k) match. ...
  5. Max out your IRA. ...
  6. Contribute to your HSA. ...
  7. Invest through a self-directed brokerage account. ...
  8. Open a high-yield savings account.
Mar 14, 2024

What to do with 50k lump sum? ›

How to invest $50,000
  1. Look into investment accounts. ...
  2. Explore low-cost investments. ...
  3. Consider diversifying your assets. ...
  4. Max out your retirement accounts. ...
  5. Optimize for tax implications. ...
  6. Invest for more than retirement. ...
  7. Chat with an advisor.
Apr 2, 2024

Is it better to invest a lump sum or monthly payments? ›

Investing a lump sum means that you don't have to try to figure out the best time to make periodic investments. You can set up your portfolio and let it grow. A 2021 Northwestern Mutual Life study showed that investing a lump sum generally outperforms dollar-cost averaging over various periods of time.

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