No Dollar Cost Averaging For Me, Thanks! (And Here's Why)

As I mentioned, my parents wrote me a lump-sum check for the money they're contributing to my life. I've already transfered 1/3 of that sum to my ING "travel" subaccount. It only remains to send the remaining 2/3 over to my Roth at Vanguard. But how to do it? In a big chunk or in regular smaller chunks?

For those of you new to investing: investing a big (or big-ish) chunk of money in smaller, regular increments is called "dollar-cost averaging." The idea is that by investing regularly, you guard yourself against the risks of buying anything at its peak and avoid the temptation to try to time the market.

To my mind, there are two major points against dollar-cost averaging:
1. Convenience
I can schedule automatic transfers from my checking account to the Roth--that's not a particularly big deal. But where would I hold the money that hasn't yet been transfered? No way I'm going to keep that money in my checking account, earning no interest while I wait to transfer it. I could, then, transfer it over to ING and let it earn 4.5% until I move it into the Roth--but that requires a lot more work: remembering to beat my scheduled transfer by several business days and transfering money from ING to Bank of America and waiting for the automatic ACH from Vanguard to hit. Irritating. One ACH transfer from my checking account to my Roth? Way easier.

2. Rate of return
Check out Google's three-month and six-month graphs of the target fund in which my Roth is fully vested. Look at the y-axis points (price) at which it crosses the x-axis unit marks (months). Each one is higher than the last: there is no point at which each month has brought net depreciation, which means each successive month, my regular investment would buy fewer shares. This is a graphic depiction of the points made by several recent posts and articles about the downsides of dollar-cost averaging, including this comprehensive but somewhat dense one and this convincing one from MSN Money. Even taking into consideration that my non-invested money would be earning 4.5%, it seems lump-sum investing beats dollar-cost averaging over 60% of the time. That article also points out that the times that dollar-cost averaging wins out are in periods spanning a major crash.

Both are important factors for me, and both point towards lump-sum investing as the way to go. That's what I'll be doing: initiating a transfer for the full amount from my checking to my Roth, and waiting for it to grow.