Having liquidity to invest when markets are up may sound like a good problem to have — but that doesn’t make it any less worrisome to contemplate buying securities just to watch their value drop should there be a downturn. Investors in this situation are left to decide which investment strategy is best for their needs: hanging on to cash, piling it all into investments, or splitting the difference with dollar cost averaging.

To help make sense of the pros and cons of these strategies, Katie is joined once more by Pete Mladina, executive director of portfolio research for Northern Trust Wealth Management, to discuss how investors can craft effective strategies to help achieve their goals even in the face of inevitable volatility and market drawdowns.

They’ll discuss the importance of aligning decisions with lifetime objectives and highlight why investors may want to prioritize goal-relative risk over asset volatility. Plus, they’ll compare dollar cost averaging to lump sum investments and challenge misconceptions about cash as a risk-free asset.

Highlights:

What is a good framework for investors to use to think about investing excess liquidity? (1:43)
What is the best time to invest? (4:26)
What’s the difference in returns between investing a lump sum or dollar cost averaging? (6:34)
What is a better measure of risk than market volatility for those with fund goals? (9:18)
How does dollar cost averaging compare with other strategies over longer timelines? (10:27)

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If you have questions about the show or topics you'd like discussed in future episodes, email our producer (contactnorthern@ntrs.com).