A risk-neutral person, intending to not reach the IRA retirement age, earning approx, $30,000 per year, in his late 20's has $100,000 in a savings account and wants to end up with:
80% Stock (of which 27.5% is international, the rest US-domestic)
20% Long-Term Bond
Immediately buying all the funds exposes the person to high volatility, but periodically investing a small amount erodes the value of the money being transferred through inflation and lost opportunity.
A compromise would be to dollar-cost-average $50,000 over a week (10k per day) into a short-term-index fund, putting the remaining $50,000 into money market (in one day), then dollar-cost-averaging from the money market into the desired asset allocation (over 6 months, say), then converting the other 50k that were put into short-term bonds into money market and then dollar cost averaging those 50k into the asset allocation as well (again, over 6 months to maintain the same rate).
Of course, the $100,000 could be put into short term bonds immediately (over two weeks at 10k per day), and then dollar cost averaged into the asset allocation over a year. However, the latter option causes taxable events on each exchange and I'm not sure how much short term capital gains are usually gained with short term bonds.
My question is which rate of dollar-cost-averaging is appropriate (is the entire sum over one year reasonable?) and where the intermediate pool of the "funds to be invested" should be stored during dollar cost averaging into the main asset allocation (money market, short-term bond or a mix).