Lump-sum investing outperforms dollar-cost averaging two-thirds of the time, according to Vanguard, even when results are adjusted for the higher volatility of a stock/bond portfolio versus cash investments.

In its report, "Dollar-cost averaging just means taking risk later," it explores the use of both investment approaches in the United States, United Kingdom and Australia. It used as its premise a gift of $20 million given to a foundation or a $1 million windfall to an individual and tried to show the pros and cons of investing those funds immediately or using dollar-cost averaging, which would invest those dollars in equal increments over time. During the time frame in which this report was written, stocks and bonds exceeded that of cash in all three markets.

The report concluded that if an investor expects such trends to continue and is satisfied with their target asset allocations and the risk/return characteristics of their strategy they should invest the lump sum immediately to gain exposure to the markets as soon as possible. If the investor is primarily concerned with minimizing downside risk and potential feelings of regret because they invested a lump sum just before a market downturn, then lump-sum investing is not the method for them.