Investing smaller amounts over time or single lump sums: Understanding what approach is right for you.

When it comes to investing, one of the first questions many consider is whether it’s more beneficial to invest frequently in smaller amounts or single large sums. By understanding both strategies and their pros and cons, you can find an approach that works for you.

Dollar-cost averaging or DCA, is an investment strategy where you invest the same amount of money at regular intervals to reduce the overall impact of price volatility of the investment and lower the average cost per share. Regardless of the investment’s price, investors following the DCA approach will buy shares regardless of how the market or their investment is performing at that point in time.

Alternatively, lump sum investing involves taking all or a significant portion of your investable cash, and investing it all at once. It’s about putting your money to work as soon as possible and relying on compounding growth over the long term.

Let’s explore the benefits of both approaches:

Why dollar cost averaging might be right for you

It’s a way to get started

The process of just starting to invest can seem insurmountable and for many the thought that they do not have enough to make a difference in the long term can have them avoid the markets all together. Investing smaller amounts over a set period of time can be a good strategy to overcome this obstacle and build the assets you need to reach your financial goals without large sums of money.

Less guesswork

Contrary to lump sum investing, dollar cost averaging can help take some of the emotions out of investing by having you develop the habit of contributing consistently to your investments no matter what is happening in the market. This approach also helps you avoid the costly pitfall of trying to time the market in the attempt to chase greater returns.


Using the DCA approach allows you to integrate your chosen investment amount into your budget, strengthening the routine of investing on a continual basis. Another benefit is that you can automate the deposit of funds into your investment account and instruct your brokerage firm or adviser to invest the amount automatically.

Why lump sum investing might be right for you

Reduces chances of spending the money elsewhere

For some, it may be hard to dedicate money to their investments on a routine basis. Additionally, there may be temptation to spend the money elsewhere and forgo investing all together. By deploying a lump sum investment approach you avoid these risks and put your money to work immediately.

Decreased Costs

Brokerages and financial institutions often charge a fee for placing trades which can add up if investing using the DCA strategy. Lump sum investing doesn’t have the trading and transactions costs that can build up over time, helping to ensure more of your money is invested rather than lost to fees. It’s a good idea to review fees for brokerage firms and financial institutions before opening an investing account to ensure you work with one that has a fee structure that works best for you.

Dollar-cost averaging and lump sum investing both have their benefits and drawbacks. While it may feel like you need to choose one strategy over another, you can deploy a blended strategy. Commonly, wise investors will invest on a scheduled basis while also investing some or all of larger sums they may receive, like annual bonuses.

Regardless of the frequency and amount you decide to invest, focusing on your long-term financial goals and developing a dedicated approach can help set you up for success on your investment journey.

Overcoming your behavioural biases when investing

Investing is rife with choices, and sometimes to avoid the uncomfortable feeling of being overwhelmed, we choose the path of least resistance or go with our gut feeling; we rely on biases or mental shortcuts to guide our decision-making. Further, human behaviour is often influenced by our unconscious emotional and cognitive biases. These biases help our brains avoid becoming overwhelmed by the decisions we make each day. While these mental shortcuts may help us in some aspects of our lives, it’s important to recognize that investing wisely requires you to go beyond a “gut check”, to use sound investing principles and do thorough research.

To avoid falling for your own behavioural biases, let’s examine some common types you may recognize.

  • Status Quo bias:The status quo bias is the tendency to keep things as they are or “stick with what you know.” With respect to investing, this bias might not seem like a problem. However, avoiding risks associated with change or perhaps favouring what you’ve always done might also mean that you fail to take advantage of investment opportunities or examine and track your investments in relation to your financial goals, risk tolerance and time horizon.
  • Confirmation bias: One factor that reinforces the status quo bias is confirmation bias. Confirmation bias means that you seek out information that only confirms your beliefs. In investing, this might show up as having difficulty changing your view of a particular stock, even in the face of data supporting the opposite view.
  • Availability bias: Availability bias implies that people believe that an event that has occurred recently will occur again soon, regardless of the probability that it actually will. When something has occurred recently or has significantly impacted us, our brains are even less likely to correctly weigh the risk or probability that it will happen again. In investing, this may show up as making a rash investment decision based on a recent headline, advertisement, or story you heard from a friend causing you inadvertently to deviate from your financial plan.
  • Present Focus bias: It’s natural for people to focus on immediate and tangible things – when compared to planning your next vacation or saving for a new car, saving for your retirement or your child’s post-secondary education may feel abstract and out of reach. For example, you may not know how much money those things will cost in the future or you may feel uncertain about how your investment portfolio will perform over such a long time horizon. As a result, you might focus on putting money towards more immediate wants and needs to avoid the discomfort of the perceived unknown.

Investing with your instincts might be tempting or feel natural, but grounding your investment decisions on fundamental research and a long-term view of your investment goals can help you invest wisely. In addition to accessing the free and unbiased resources available through the Alberta Securities Commission’s website, consider other ways you might reduce the impact of unconscious biases on your investment strategy, such as enlisting the services of a financial advisor or robo-advisor.

Four steps to take before jumping into crypto investments

The increasing popularity of crypto assets and the ongoing media coverage of coins like Bitcoin and Ethereum have piqued the interest of many new and experienced investors alike. Whether you’re interested in investing in crypto assets or simply learning more, consider the following before jumping in:

1) Understand your risk tolerance
Crypto assets are high-risk alternative investments that have the potential for high returns. Judging the inherent value in any crypto asset can be difficult, with its values largely determined by its evolving utility, public interest and the current levels of supply and demand. Before investing in any security, a crucial first step is to weigh the risk of the investment against your risk tolerance. Risk tolerance is your ability and willingness to take risks with your money. By recognizing the amount you can afford and are comfortable with potentially losing in a crypto investment, the more likely you are to invest suitably. If you are unsure of your risk tolerance, you can take the risk tolerance quiz at

2) Be mindful of the crypto asset trading platform you choose to use

The popular way for many investors to buy or trade crypto assets is through a crypto asset trading platform. If you are considering using a trading platform to buy and sell crypto assets, it is strongly advised that you use one that is registered with the Alberta Securities Commission (ASC). If a crypto asset trading platform is not registered, there are no assurances that any of the typical investor protections may exist, including secure handling of client funds, safekeeping of client assets, protection of personal information, pre-trade disclosures, and measures against market manipulation and/or unfair trading. To check the registration of any crypto asset platform, use the check registration tool on or the list of registered crypto asset trading platforms across Canada on the Canadian Securities Administrators website.

3) Be cautious of crypto scams and frauds
Fraudsters are always looking for the next big trend or buzzworthy event to leverage. As crypto assets continue to generate excitement with new and potential investors, fraudsters will continue to take advantage of people’s interest to promote crypto scams. Be mindful that many crypto scams involve one or more of the following:

  • Unusual requests for payment like wire transfers or the transferring of crypto assets from one platform to another.
  • High-pressure sales tactics, confusing jargon and complex documentation regarding an investment opportunity.
  • New initial coin offerings with limited or no documentation like whitepapers on the coin or the coin’s founders.
  • Promises of high returns with little to no risk.
  • Unsolicited crypto investment offers online, over social media and in dating apps.

4) Strengthen your investment literacy and conduct thorough research
Investing wisely in new alternative investments like crypto assets requires you to strengthen your knowledge to ensure that you fully understand the investment opportunity before you hand over your hard-earned money. Before investing in a crypto asset, visit the Innovation in Finance section of the Alberta Securities Commission’s website for important questions you should consider asking.

Crypto assets are high-risk investments that are not suitable for all investors. The nature, longevity and future application of crypto assets are largely unknown and evolving. While the excitement can be overwhelming, taking the time to learn about crypto assets before investing can help you invest suitably and avoid scams. Learn more about crypto assets at

How to successfully approach your new year’s resolution to invest

Now more than ever, investing has become top of mind for many, with new investors ready to jump in and start their investment journey in 2022. While investing can be a core component to growing your wealth, approaching it wisely will help you reach your goals and avoid costly mistakes and fraud. If your new year’s resolution is to start investing, consider the following steps to hit the ground running and invest wisely in 2022 and beyond.

1) Map out your financial goals first
While you may be raring to go with starting your investing journey and building out your investment portfolio, remember that success relies on planning your goals and utilizing the appropriate investments to get you there. By understanding the time horizon (the length of time you expect to hold an investment before needing the funds), you can assign suitable investments with varying levels of risk to drive the best returns over time. Before you consider any investment, first map out your short (6 months to 5 years), medium (5-10 years) and long-term goals (10 years or more).

2) Learn about the registered and unregistered accounts available to you
As a Canadian citizen, registered accounts are available to you with unique properties to help you reach your financial goals. A registered retirement savings plan (RRSP) is an account designed to reduce the income tax you pay on the money you contribute towards your retirement. A tax-free savings account (TFSA) is an account allowing you to save or invest a defined amount tax-free each year throughout your life. These are examples, and you have access to a variety of accounts that can help you achieve your goals. Learn more about the different accounts and how you can leverage them.

3) Understand your risk tolerance
Investments carry a level of risk in line with their potential for return. One of the most common mistakes investors make is exposing themselves to a level of risk far outside what’s appropriate for them. This is called investment risk tolerance, and ignoring or not knowing your ability and willingness to take risk can expose you to dramatic losses. If you are unsure what your risk tolerance is, you can take the Check your risk tolerance quiz. By answering these questions openly and honestly, you can get a better sense of the level of risk you are comfortable taking with your investments, before you start.

4) Improve your investment literacy
If you feel like you still need to learn more about investing before starting, that’s great. It’s important and worthwhile to enhance your knowledge and learn how to invest your hard-earned money wisely. The Alberta Securities Commission offers free, unbiased investment literacy programs with partners across Alberta, covering everything from starting your investing journey to recognizing and avoiding scams and investing in cryptocurrency. If you are interested in attending a virtual program, visit Investing 101 classes and events page to learn more.

Confronting the five cognitive biases of self-directed investing

Money is a powerful tool in our day-to-day lives. There are various emotional connections and cognitive biases that impact how we spend, save, and invest our money. When it comes to investing, you perform the best when making informed decisions and approaching the market methodically and rationally.

Our investing behaviour is defined not just by the act of buying and selling investments, but also the psychological traps and misconceptions we have to contend with. Below, learn more about how you can recognize these negative biases and take a more calculated and successful approach with your investing.

Overconfidence effect: is a well-established bias in which your confidence in your judgment does not align with your actual accuracy and results. In investing, this can lead you to overestimate your understanding of the stock markets, ignore or disregard information and expert advice, take greater risks than is suitable for you, and ignore red flags of poor investments and fraud.

Herding behaviour (aka. FOMO effect): often linked to wild and irrational stock market bubbles, herding is the tendency for us to want to follow the crowd. The fear of missing out on the next big investment can influence you to make investment decisions in line with what you see and hear from others and less so on the fundamentals of the company you are considering. Fundamentals include profitability, revenue, assets, liabilities, and growth potential.

Confirmation bias: is when you have preconceived notions about a company or investment and seek out information that supports your beliefs rather than building a comprehensive understanding through objective research and data. This bias can make you invest in companies with a skewed sense of its business potential.

Loss Aversion: is the tendency for you to place more importance on losses rather than gains. This can lead you to hold on to a stock that continues to drop in value while all current rational analysis tells you to sell it. Inversely, this could also have you selling a stock that went up in value slightly to realize a gain, while ignoring analysis telling you that it should be held longer for a much greater profit.

Anchoring: is when you anchor your opinion and value of an investment to one piece of information or price and ignore the company’s fundamentals. Worse yet, anchoring can quickly lead to confirmation bias, having you look for additional information that aligns with your anchored belief in the stock.

Investing in the stock market on your own can quickly bring out these biases, impacting your investment portfolio. By recognizing when you are being influenced, you can better address the bias and ensure that your investment decisions are based on rational analysis. If investing on your own may sound too challenging, financial advisors and robo-advisers can lay out an investment strategy that will help you invest for the future and avoid these common psychological traps.