Investors like to worry. And they should. Risk is part of investing. If you have nothing to worry about, you should expect to have very low returns. Markets have been on a steady rise for quite some time now. During periods like this, investors will usually worry that the market is too high. Fear of investing at the top of the market might deter them from investing at all, instead choosing to wait until markets drop.

The problem with this thinking is that we are not able to predict the future. If markets continue to rise from here, you will have left gains on the table.

And even if markets do drop at some point, how will you know when to buy in? Successful market timing is no easy feat, and there is no evidence that it can be accomplished consistently. Peter Lynch, one of the most successful investors in history, explained that Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

If you have a pile of cash right now, there are a few things that you can do. You can wait for a correction, dollar cost average over time, or invest right now in a lump sum.

In this post, I’m going to tell you why right now is the best time to invest.

Tactical allocation funds are actively managed funds that change their allocations to different asset classes over time based on what they think is going to do well. In other words, they are funds that specialize in market timing. As is the case with most actively managed funds, tactical funds tend to under-perform index funds. Market timing is not something that you should expect to lead to a successful outcome.

If market timing won’t work out well, maybe dollar cost averaging will produce a better result. Dollar-cost averaging  is a well-known strategy that consists of investing fixed amounts over time. For example, instead of investing $200,000 in a lump sum, you might choose to invest $20,000 per month over the course of 10 months. One of the reasons that dollar cost averaging has a good reputation is that you won’t end up investing all of your money right before a market crash. As you buy assets at regular intervals, you will be buying less shares when markets are going up, and more when markets are going down. Sounds pretty good, right?

The problem with a dollar cost averaging strategy is that it lowers your expected returns. This makes sense for the simple reason that over the period of time that you are dollar cost averaging, you are holding cash. Cash reduces the expected returns of your portfolio. There is a bit more to the downside of dollar cost averaging than my simple explanation.

In a 1979 paper titled A Note on the Suboptimality of Dollar Cost Averaging as an Investment Policy, George Constantinides explained that dollar cost averaging is suboptimal. A 2012 white paper published by Vanguard titled “Dollar-cost averaging just means taking risk later” analyzed a comparison between dollar cost averaging and investing in a lump sum across the U.S., U.K., and Australian stock markets. They consistently found that investing a lump sum outperformed DCA about two-thirds of the time.

The evidence is clear. Dollar cost averaging does not deliver optimal results most of the time.

Your best bet, resulting in better performance compared to dollar cost averaging about ⅔ of the time, is investing in a lump sum.

Optimizing based on the evidence is a great sounding idea, but an investor holding large amounts of cash would often be uncomfortable dumping all of their money into the market at once. They fear the regret of watching their newly invested portfolio drop in value. If you had invested $200,000 in a globally diversified portfolio in March, 2008, you would have been left with only $119,000 by February, 2009.

As bad as that sounds, that same $200,000 investment would be worth $364,000 if you had held it until the end of July, 2017. It’s all about how much risk you can emotionally handle. Lump sum investing is likely to give you the best result, but you need to be able to emotionally handle potential swings in your portfolio.

Market timing is not an option. If you have money to invest, you should either build out a dollar cost averaging strategy, or invest a lump sum in a risk-appropriate portfolio right now. Statistically, the lump sum investment will give you the highest expected return. As long as you can handle the ride, right now is the best time to invest.

In my next blog post, I will tell you why your financial advisor doesn’t like index funds.

I’ll be talking about a lot more common sense investing topics in this series. I want these posts to help you to make smarter investment decisions, so feel free to send me any topics that you would like me to cover.