Do I Dollar Cost Average or Lump Sum Invest? The Best Way to Invest a Windfall

So I got a reader question:

Hi Sim, I sold my home and have an extra $50k, but the market is high, what do I do?

Financial advisors and commentators (myself, the commentator) have always shared that dollar cost averaging is the best thing to do when you have a windfall amount of money.

Maybe it’s a $10k bonus, maybe it’s a $100k inheritance. Maybe a target sign fell on your foot, and you paid out $500k (is that not the American dream?)

But regardless of how you got the money, the question has always been.. How exactly do I deploy that cash into the stock market in such a way that I can maximize my returns and minimize my risk?

In usual Sim form, I went and looked at past studies, analyzed what’s worked so far, and did some modelling of my own, to get you the right answer,

Spoiler: It’s not dollar cost averaging