Educational brief
Contribution Timing Risk: Monthly vs Biweekly
Comparing deployment schedules and their effect on accumulation, volatility, and dispersion.
Updated
In short
Contribution cadence changes entry distribution and can produce meaningful differences in drawdown, units accumulated, and long-run dispersion.
Key takeaways
- Cadence affects realized entry prices in volatile periods.
- More frequent contributions can reduce timing concentration.
- The best cadence is the one an investor can execute consistently.
Full analysis
Why cadence changes outcomes
Contribution timing risk arises because cash enters the market at discrete points. Monthly and biweekly schedules sample different prices over time, especially during volatile regimes.
The difference may look small in calm periods but can become meaningful during sharp drawdowns or fast rebounds.
Trade-offs across schedules
Higher frequency contributions can spread entry timing but may increase operational complexity. Lower frequency is simpler but concentrates timing risk.
The right schedule is the one that balances implementation consistency with acceptable timing dispersion.
Testing cadence with evidence
Run cadence comparisons on rolling windows and review dispersion, drawdown, and recovery statistics. Avoid selecting cadence based on one historical episode.
If differences are marginal, choose the schedule that best supports long-term adherence.
How to apply this
Use this topic as one module inside a broader simulation process: define contribution rules, test across rolling windows, and compare drawdown and recovery behavior across regimes before selecting a policy.