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Will investing in stocks be a good way to use a lump sum of money?

A study was made (sorry no longer remember who did it and link to the source, but I may try to find it if I have time), indicating that investing smaller portions but regularly outperforms a lump sump investment long term.

So, if you have a large sump, identify stocks you want to invest the money to and then divide the sum by number of the stocks. Then divide each number by at least 3 payments (if your sum is large to divide by more, do so). Then invest those amounts in monthly intervals, usually on drops of the price.

If you want, you may use put options to buy those stocks. In that case, make sure, you divide the amount for each individual stock in a way that each purchase will allow buying 100 shares. The sell at the money cash secured put. If the stock moves away from you, the put become worthless (you can roll it higher to trail the stock price while collecting premiums). If the stock dips below the put strike, you will buy 100 shares at a lower price. Then sell another put for the next cycle.

So, for example, you have $500,000 lump sum and you want to invest to 10 stocks. That means, you can invest $50,000 to each stock. Then let’s say one of your selected stock is Apple (AAPL). Currently it trades at $298.54. In order to buy 100 shares in a cash account (not margin), you will need $29,854 sum. That means, you can sell 1 put to buy in the first 100 shares (for the rest, you will not have enough cash, so you will be buying out right.

Then you can sell 1 AAPL January 17, 2020, 295 strike put and collect 4.35 or $435 dollars premium. If the stock stays above 295 by January 17, 2020, the option expires worthless, you keep the premium (you can immediately reinvest it), and you can sell new February 21, 2020 put. If the stock dips below 295, you will be forced to buy 100 shares of Apple at 295 a share.
Do this with all other stocks until you are fully invested. Then you can start selling covered calls to collect even more premiums. I recommend investing in high quality dividend stocks as with them you can afford to sit on them through any market, collect dividends which are increased every year, collect premiums from covered calls and cash secured puts, so in fact, you will hit triple income with one stock. If you have 30 years (for example) in front of you till retirement, you do not have to worry about any risk in stocks whatsoever. No bear market or recession takes longer than 2 years and it always recover. Just look at previous recessions and today’s market. The 2008 recovered in 3 or 4 years and from there we just rallied and rallied, and rallied. And during that 30 years, you will be collecting dividends (note that many high quality dividend growth stocks increased dividends in 2008 when everybody was panicking, selling everything, screaming, running for cover, and predicting end of the world).

If you stick to the plan, you will never be forced to sell a single share of your holdings and just live off of the income it will generate. As of today, per my own personal experience, you can expect 30% annual return +/- on this triple income strategy. Note, this may vary based on selected stocks and other market factors. But over the long run, you will not lose (unless you foolishly sell in the next bear market worried about your money like many investors out there end up doing and they ultimately end up selling low and buying back high, losing money.

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