One-off or spread-out investing: what works best for you?

When you are ready to invest, one of the most important questions is: do you put the amount in one go, or is it better to invest periodically? At Vive, we help you make the right choice, depending on your goals and risk profile. In this blog, we explain the pros and cons of both options, so you can make the decision that best suits you.

Should I invest my money in one go or spread out the deposit?

We like to keep things simple at Vive, but we understand this choice can be difficult. Investing a large amount in one go can turn out favourably if you happen to enter the market at a low point – you buy in cheaply. But it also carries the risk that you enter the market right at a peak. Spreading out your deposits, also known as dollar-cost averaging, offers a way to reduce this timing risk by spreading your investment over a longer period.

• Example: Suppose you have €12,000 available to invest. If you invest this entire amount in one go and the market drops shortly afterwards, you immediately suffer a loss on the full amount. If, however, you choose to invest €1,000 monthly for 12 months, you also buy in at times when the market is lower. Your average purchase price may then be lower, which reduces the risk of having invested everything at a peak moment.

With spread investing, you therefore do not have to time the market – you automatically include both lower and higher prices, which results in a better average.

What are the risks of investing in one go?

Depositing everything in one go means that from day one you are fully exposed to the whims of the market. This can lead to big profits if the market rises immediately after you enter, but also to substantial losses if the market falls. The biggest risk is that you invest exactly at a moment when the market is at its peak, followed by a decline.

• Example: In 2008, during the financial crisis, stock prices worldwide fell by more than 40%. Investors who had invested their entire capital in one go just before that crash suffered significant losses. If you had, however, spread your investment over that period, you could have bought in cheaper when prices fell, resulting in a lower average purchase price.

In short, investing in one go increases the impact of timing: timing it well can be very rewarding, but timing it wrong can be painful. You can reduce this risk by spreading your investments.

How does spread investing affect risks and returns?

Spread investing reduces the impact of market fluctuations because you enter the market at different times. For example, you invest a portion of your money every month or quarter. This can help prevent major losses, as not all of your assets are in the market at an unfavourable time.

The potential drawback is that if the market were to go up in a straight line, you would miss out on some returns with spread investing compared to immediately investing the full amount. Nevertheless, periodic investing usually offers a more stable approach with less risk, especially for investors who find peaks and troughs difficult. You spread the risk over time.

• Example: Suppose that in 2008 you had divided your €12,000 into 12 monthly deposits of €1,000. During the months of the crash, you could have invested a portion of your money at much lower prices. As a result, the final value of your portfolio could have been higher than when you had invested everything just before the crash. Spread investing acts here as a built-in safety net strategy.

What is smarter if I have a long investment horizon?

Do you have a long term in mind (for example, 10 years or longer)? Historically, early and lump-sum investing often yields a higher final amount, because you then benefit maximally from compound growth (the interest-on-interest effect or growth-on-growth in investments). Every day your money is in the market, it can generate returns. From that perspective, investing in one go can be advantageous if you immediately have a large amount available.

On the other hand, if you have a long-term horizon but feel uncertain due to short-term volatility, spread investing can still give you more peace of mind – even if you theoretically have slightly lower returns, you will likely sleep better with a gradual entry.

• Example: Maria has received €10,000 and has a 20-year horizon until her retirement. She could invest that amount in one go to optimally benefit from 20 years of growth. But Maria is afraid of a sudden crash. She therefore decides to invest the €10,000 spread over 10 months. This way, she gradually enters the market. After 20 years, her final amount is slightly lower than if she had invested everything directly on day 1, but she never had to worry about the wrong moment to enter.

Is it sensible to invest in a mix of stocks and bonds?

Besides the choice between lump-sum or spread investing, there is also the question of what you invest in. A mix of stocks and bonds is often sensible, tailored to your risk appetite. Stocks usually offer higher returns in the long term, but they fluctuate. Bonds are more stable and generally provide fixed interest or smaller fluctuations. A balanced mix can ensure you benefit from both: growth through stocks, and stability through bonds.

Vive usually recommends a personal mix based on your investment profile (internal link to profile selection). If you are young and can invest for a long time, you might be able to hold more stocks (more offensive). If you are closer to your goal or retirement, you might want a few more bonds (more defensive) to protect your profit. The beauty of periodic investing is that you can also adjust your ratio with every deposit if necessary.

Unfortunately, there is no direct answer

There is no definitive answer to the question of whether it is better to invest in one go or to spread your deposits. It depends on your personal risk appetite, the amount of money you have available, and your financial goals. Investing in one go can yield more if the timing is right, but it is riskier. Spread investing provides more peace of mind and consistency, but may take slightly longer for the same result.

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