Does Dollar Cost Averaging Work?

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Does dollar cost averaging actually work? Let's find out together.
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Dollar cost averaging is a method recommended for investing money for both beginning investors as well as seasoned veterans. And as a financial education channel, I feel it is my duty to put this theory to the test! In this video, I present to you my findings.
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[@NextLevelLife]

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[@nickgoodwin4271]

DCA was my only option because I was poor and didn't have a lump sum of anything to invest. Started with $50/month all the way to financial independence 22 years later. I always say the stock market is the fairest financial market. Nearly everyone has access to it. You don't need good credit, collateral, lump sum, etc. Race, gender, sexuality, class, etc are never an impediment. Just need a few dollars a month and some time.

[@rmworkemail6507]

2 years after. How is it going for you? Do you still recommend it? What would you improve?

[@elliottamartin]

I think it's clear that if you have that lump sum, dollar cost averaging does not make sense over time. For my own investing (without a lump sum), I like dollar cost averaging because it takes the emotions out of investing. There's no gambling, market timing and speculating and I've become a disciplined investor on auto-pilot.

[@NextLevelLife]

I whole heartedly agree. I think DCA only really becomes a question when you have a lump sum to invest. Without a lump sum I like to take the emotions out of investing as well through DCA. Thanks for sharing your thoughts ☺️!

[@j936-n6n]

I would rather use dollar cost averaging, and keep the lump sum I have to help me survive a financial crash(when you are likely to be out of work and STILL have to keep paying for the stock market to keep the dollar cost averaging) that or invest when a market crashes if my job is still secure. I think if you have a lump sum, you should not invest it at a random time. Not sure if my assessment is correct.

[@AlianzaSur13]

@@j936-n6n you are right on point, before making any type of investment you need to make sure you have at least 12 months of emergency savings ( some ppl might argue 6 months). Once you have that then you max out your 401k up to employer matching contribution then max out your hsa then if you dont need the tax break to your roth 401k.

[@soymaxxing]

Lump sum investing has been more effective in US stock history thus far. The idea is more risky than DCA. but thus far in history US stocks have generally trended upwards. If you buy into the fact that it will continue to trend upwards forever, than yes lump sum away. If you don't than DCA is better. For example, if you lump summed invested in Japan those years ago, you would still be negative. If you DCA, you would be around positive or slightly negative. Edit2: Also if you're investment window is large (ie 10+ years) then there isn't as much difference.

[@neptunespear7024]

@@soymaxxing agreed. For me personally, I prefer a combination of DCAing and "lump sum" investing. I DCA into my portfolio every Monday, and then if the S&P is down 3 or 4%, I may throw a couple hundred more in just to get more shares at a lower price. Back in March of 2020, I did the same thing, but on a larger scale with all available funds I could spare, and then resumed standard DCAing. Thus far, a combination of the two methods has worked well for me.

[@patrickfournier9895]

If you have a lump sum, invest it. But don’t build up a lump sum to time the market. That’s the point

[@FBAagent]

Hi Patrick Fournier, do you think that lump investing is relevant today?

[@patrickfournier9895]

@@FBAagent I don't understand what you're asking. Invest the money when you have it, don't try to time the market by building up a lump sum.

[@FBAagent]

@@patrickfournier9895 Thanks for your reply. I mean we're on a bear market but we are in a busting of a big bubble right?

[@scepticalthinker8561]

Edwin Pitono looking back at the NASDAQ and S&P 500 charts now, three months ago was a much better time to put your money in the market than it is today.

[@7Earthsky]

@@scepticalthinker8561 That's like saying it was better to live in Mars before Covid outbreak...No one can see the future and no one can predict the market...The sooner investors realise that in their investing life, the better.

[@InternetHustlerOfficial]

The best option is to combine those methods. Invest a lump sum amount and then maintain your continued investing of regular amounts. That way, you'll take advantage of the compound interest on the initial amount and you'll cover for any rises and falls with the regular investments.

[@NextLevelLife]

I couldn't have said it any better myself, Spencer!

[@pablo08034]

I love it when people appreciate the value of a dual approach.

[@martijn439]

@Jason Somers shut the fuck up scammer

[@musicuniverse1356]

I do the same method, I call it the "hybrid method". If I had $1000 and put in $500 first then spread out weekly the remaining $500. You want a Middle ground where you don't throw the whole thing into the market at one time but you don't want to spread out too thin over time.

[@yevinorion]

The reason I do DCA is because I don't have a lump sum to invest. So this allows me to get in there and start investing at all. To me that's the biggest use-case for it.

[@martinguila]

If one were to start dollor cost averageing in 2007 it seems clear to me that one should increase the amount after large downturns. It doesnt pay to wait for recessions, but if one happen to have a pile of cash and the market is down 20-50% I think thats a great time to invest more than you usually do.

[@Bobbobbob984]

This video is pointless. You didn't make any analysis of risk at all. Obviously expected average rate of return is higher the earlier you invest. To actually analyze risk you need to compare both methods at random points in time and compare what the greatest loss is. It's not just perceived loss. If it is something that is very high risk as in it keeps jumping between 1 to a hundred to 5 to 2000 the dollar cost averaging is much safer than investing at a random time. There's almost no chance you repeatedly always invest at a peak. If you invest all at once there's a significant chance you might have invested too high. Risk is the variance in investment returns and you never analyzed that at all.

[@Commando303X]

Agreed. One could think of this, both conceptually and mathematically, as one may of any other investment: a certain option might be more lucrative than another; but, at what increase in risk is it so (i.e., what is the standard deviation)? This is how one compares, say, index funds, and it is how one might consider lump-sum versus dollar-cost-averaging approaches to investing: which track comprises more volatility?

[@proHannuTorrekens]

Dollar cost averaging complately avoids the risk off investing a lump sum at an all time high. For example if you invested at an all time high in 2000 you would have to wait till 2007 to break even and just to have another crash next year and have to wait till 2012 to break even again.

[@leeroymlg4692]

This

[@mp40girl]

Whether or not DCA works depends on your situation. 1. If you have a lump sum and no more money to invest, don't DCA. Simply have a 70:30 stock vs. bond or whatever percentage that suits your age and risk tolerance. If the market goes to shit, sell the bond part to buy stock and vice versa. The reason is, by DCA, you don't eliminate the risk of investing at the peak, you simply DELAY it. You'll never know whether the market will tumble RIGHT AFTER you put in the last portion of your money. DCA with just a lump sum is MARKET TIMING. The expectation is that it will go down, at least during your DCA period. Problem is, nobody knows when. We all know how well market timing works. If the market keeps going up, DCA keeps lifting your cost along the way and missing the gain you would have had had you put in the lump sum in the beginning. 2. If you have a lump sum and can continue to invest, you don't need to DCA the lump sum. Put it in and continue to invest afterwards. It's like combing the two. 3. If you don't have a lump sum, you have no choice but to DCA. There 's very little need for DCA except for psychological reasons. The insurance comes only with consistent DCA, which is often out of necessity rather than by choice. The benefit that comes with consisent DCA doesn't apply to splitting a lump sum.

[@grf73tube]

Regardless of having an advisor or not, people use DCA because is like an insurance against a crash immediately after you start investing. Statistically speaking is very unlikely that you will start investing at the peak of a bubble like the one in 2007, but such an event is too much to swallow. So, you “pay” the cost of the insurance by using DCA and in exchange you get peace of mind, there´s nothing wrong with that. It´s like a fire insurance: everybody pays it even though the probability of a fire is extremely low. In that sense, DCA does it job! Additionally, if you invest what you can save from your salary, you don´t have any other choice but use DCA.

[@NextLevelLife]

Gabriel that's true. DCA is usually only a real question if you happen to come into a decent sum of money all at once (such as an inheritance) as opposed to whether you should be DCA'ing your paycheck. And ultimately there is nothing wrong with going either way even with something like an inheritance if it helps to put your mind at ease when investing whatever portion of that money you choose. I like how you look at it as a sort of form of insurance though. Makes it easier to visualize!

[@FBAagent]

@@NextLevelLife what about today?

[@FBAagent]

@@NextLevelLife would you lump invest today 19th amy of 2020 sir?

[@Hongkongcooie]

One main reason I see for dollar cost averaging, is that you simply dont have the money, but have a steady income, so allows you to invest monthly.

[@rosskline]

Thanks for the explanation. A bit of clarification though... the purpose of the concept isn't to decide whether or not to invest a lump sum or spread it out, but rather to help clients understand the benefits of volatility. Clients tend to desire stable investments because of the reduced stress, but it's volatility paired with the power of dollar cost averaging that adds up to much better returns.

[@pedroteixeira07]

I'm a bit confused about the concepts in this video. It makes sense in the scenario when one has an initial sum lump to invest that is different from the regular amount you'll be able to inject. Let's say you do not have an inheritance (as with your example), and you are starting with the 100$ which is the only amount you can set aside from your regular monthly income - Wouldn't be best to start with the dollar cost avg approach immediately with the 100$ per month in order to benefit from compound interest?

[@pedroteixeira07]

Nevermind, I just read the comments below that answered my questions and we happen to be all in agreement. However, I must say that because your video just explains only this one scenario when you have a sum lump to invest initially, it can be very misleading. My first impression after watching it was that DCA was bad, period. I think you should add the proper caveats and make it clear that DCA is not the best choice in this context. My understanding is the opposite, that DCA actually works as a strategy once you invest the sum lump you have.

[@Commando303X]

A side risk of lump-sum investing can rest upon the odds of life's happening: Say you place a huge amount of your money into the market, the latter tanks, and suddenly an emergent personal expense arises (one that exceeds the capacity of your emergency fund). In such scenario, dollar-cost averaging would favor your benefit.

[@hanishag]

True, for the vast majority of the time, DCA results in lower returns over the long run, but if one happens to start investing for the first time either just before a crash or as a crash begins then DCA would not only help in the short term it will also help in the long term than if you had invested as a lump sum.

[@jammy1541]

Hani Darwich I’m in that exact situation now. I’m ready to invest for the first time and due to corona I think dollar cost averaging is the best option for me at this time due to volatility in markets

[@sdot7117]

DCA is the best option in high volatility markets.

[@kylecooke5062]

Sean Ilenrey you’re exactly right and from this example, $500k vs $543k is a “possible” extra $43k over 40 years is that really worth it? That’s technically just over $1k extra per year. Which in my opinion isn’t really a big deal. I hope you are a financial advisor so you can show people DCA and how it is less risky and still provides similar returns. Good luck in your investing!

[@usageeko1]

What if you have say 50k in this market (volatile)? Split it into 10k chunks or do it over two years?

[@kh485]

This advice is ridiculous. Do you think billionaires and millionaires are dollar cost averaging? This is a good way to either go broke or go absolutely nowhere over your entire working career. Of course, this depends on where you are in the market cycle. Think about it when you retire and allocate your investments and savings accordingly isn’t that an away time in the market.? How do you know that when you’re ready to retire at the market won’t be in a giant slump. What if during the last 10 years of your working career there’s a giant depression and you lose all of your money? The secret is what most financial advisors won’t tell you. Because guess what, they’re in it for taking your money.

[@sdot7117]

Kurt Holloway Keywords...high volatility. And yes I do.

[@alex2143]

Sean Ilenrey I don’t believe it is. You’re still letting your money sit idly by, doing nothing, while you’re dollar cost averaging it in. You shouldn’t invest with money you can’t afford to miss for a long period of time anyways, so short-term volatility is really not that meaningful. Unless of course you’re buying individual stocks, in which case... don’t do that... but otherwise, you’ll lose more often than you win by dollar cost averaging as opposed to lump sum investing. What makes a market highly volatile as opposed to just the market?

[@canefan17]

Lump sum works great if you get in at the right time. Do other tests than 1977

[@diogofarias1822]

Like investing the whole amount at once on january 2007.

[@amolsw]

Very true

[@Citizen_X.]

Timing the market is a futile endeavor

[@brkbtjunkie]

@@Citizen_X. whatever... I timed my investment into nvidia perfectly... when it was at $43

[@tripillthreat]

My take is that, as you say, “more often than not,” a lump sum will work out moderately better than DCA. But every once in a while (like shortly before the market takes a significant downturn) DCA works out significantly better than a lump-sum investment. So the state of the market relative to past performance might influence whether I did one or the other.

[@PluggStarz]

Just dca BITCOIN since today and you will be fine

[@FabianHonhaiser]

Haha nice

[@alexl8392]

I think maybe the way it was articulated in this video was incorrect. I have never heard of DCA & I'm actually watching to learn. But based on everything in this video, it seems like it DOES WORK but isn't the most optimal or efficient method of investing vs. investing large/lump sums (if feasible). Idk, maybe I'm being pedantic over the semantics?

[@yootoobur101]

Is it better to set up weekly or monthly automatic payments? Or it doesn’t matter ?

[@JoelZapata1]

Depends if there are transaction fees

[@papijelly]

If no transaction fees it still falls under dca. So which ever makes you fell more comfortable and more engaged. As engagement help learn things as you find other stuff you will like to know more off.

[@kllil2]

I think lump somes are only better because your money works more. At an earlier time i think dca numbers are fire cuz you literally have chance to make hundreds of gains on a good luck

[@TheBlueQuasar]

First time I've disagreed with you, however only on a minor point. I agree that lump sum today over dividing it up over a set time frame will almost always win over the long haul. However, if that lump sum was created by "banking it" until that lump was invested, that is rarely the right idea. The sooner the money can get into the market the better over the long run. Because the trend is "up and to the right" but the market is unpredictable, doing a lump sum annually is like trying to time the market. DCA removes the guess work by increasing the frequency of purchases, less likely to miss "sales". Little guesses more often is better than making a single guess that is huge.

[@flightman12]

Invest early and often.

[@Tigrou7777]

What about people who invested a lump sum in the end of the 60's or 90's (right before the crash). How much time would it take to recover their initial investment and start making profit ? In those cases would't DCA be better ?

[@288theabe]

I see DCA as a risk mitigation technique more than anything, but if I get a lump sum of anything, it’s going straight into investments

[@Quavotake1]

Ive recently started investing so I am by no means an expert this is just my current understanding. I believe I understand the merits in both methods - DCA and investing in lump sum. However my only hesitation with DCA (atleast smaller amounts) is brokerage fees. I am charged per transaction so if factored in over a period of 10 years. Say $10 brokerage fee per transaction and im practising DCA investing monthly. Thats $1200 dollars purely in transaction fees whereas I could 'spend' a fraction of that number investing in lump sum

[@alexanderschwartz3378]

Use Charles Schwab, no transaction fees!

[@Quavotake1]

@@alexanderschwartz3378 Thanks Alexander. I live in Australia though. To my understanding Charles Scwab is just for US residents

[@reocoetzer]

Hey Erene Niyonsaba, I just opened an account to invest with ANZ, but realized that its $20 per transaction, so I'm trying to find a better option in Australia to do DCA in the S&P500. Any suggestions?

[@TallDude73]

You may wish to do a video on Value Averaging, invented by Michael E. Edleson. It's a more complicated, but better performing, version of DCA. I think it is really cool for more hands-on investors.

[@NextLevelLife]

I might at that! Thanks for the suggestion ☺️.

[@DBR6464]

TallDude73 please . It’d be great

[@slowandreverbradio]

In a scenario where dollar cost averaging is something you do because you do not have a lump sum to invest in (like the majority of people), most people would use a chunk of their monthly salary to put towards DCA investing. However, the question I've always had is at what point, if there is one, do you stop actually dollar cost averaging and putting that monthly sum into your stock market investment instrument? Whether it be an index fund or holding your chosen asset class in a trading account, is there a point at which you stop actually investing? I've been doing this for coming up to 2.5 years now and in the long run for the purposes of the strategy I'm implementing, this is no amount of time at all but is there an optimal point at which DCA becomes disadvantageous/does not reap benefits? Would be great to hear people's thoughts/research they might know of!

[@HeidiWruck]

Hello! Thank you for your videos. I was wondering if you'd do a series on retail pricing... I.e. margin vs %, how to adequately price stock. What factors to take in when pricing stock, how do you determine a true cost of sales not just using buy price for your margin calculation.

[@flightman12]

Invest early and often. If I knew what I know now at 40yrs, I would would have been more aggressive with investing at 20 yrs old. Luckily I started my 401k at about 26 years old and was moderately investing. Investing takes time... Requires patience. DCA for the most part since money source is salary and lumpsums if I land into a bonus or made money off the sale of something. Living on less than you make ultimately allows for more money to invest. My 2 cents

[@ren7sp25]

S&P 500 at ATH: dca. S&P 500 at ATL: lump sum. Ez?

[@Citizen_X.]

For beginner investors, DCA is a good way to test the waters until they are ready to go all in. For e.g. the recent GME investors, majority of who seem to be beginners, now so dearly wish they had not all gone in by taking loans.

[@jcw034]

This probably could have been summed up in 2 sentences. If the market is in a bubble and gonna pop or crash DCA is the way to go. If not throw as much in as quicklt as you can

[@em26jamie]

I thought he question is does it work, not how does it compare to lump sum? To answer the question you just have to see if it makes more money than you put in, not whether it outgained a lump sum over 40 years. A lot of people don't have that lump sum, so they just contribute a little every month. And since most people start late, 40 years is probably not a good time frame, but more like 20-30 years.

[@elonmusk9935]

I’m DCA’ing into the market simply because that’s my only option (without a lump sum), but like the quote at the end, investing to begin with is the way to go.

[@JM-yd7rq]

What if you only do periodic buys when the market is dropping? Like your 2007-2011 example? Pick an entry point and take a position. If the price drops, buy more, if it drops further, buy more. When it rises, sit.

[@Commando303X]

I would counter that, in a market that has been greatly more volatile from the mid-1990s onward, and for an investor whose time-horizon might be of well fewer than four decades, dollar-cost averaging (versus up-front lump-sum investing) could help improve the chances of success. America is, in fact, in uncharted waters relative to its life during the twentieth century, insofar as the behaviors of central banking, the economic successes of other nations, and further important factors.

[@anthonycantu8879]

For anyone entering the stock market, DCA is DEFINITELY the way to go. It's better because you are, hopefully, going to educate yourself along the way. You'll become, over time, a more sophisticated investor. And, any opportunities that may come along the way that looks like a lump sum candidate, you'll have done your due diligence and, thereby, will have mitigated your chances of loss. Starting, out the gate with a lump sum is, in my opinion, nothing more than gambling. Especially if you aren't familiar with stock market investing and all its nuances.

[@VroomBroomZoom]

I think you're saying it "doesn't work out" whereas what you mean is that it "doesn't work out as well"???

[@christophertaylor3150]

What is wrong with just using a little bit of common sense and having a simple plan. I have Several mutual funds and ETFs and a couple of strong individual stocks. I am saving X dollars every month. At the beginning of the next month I look and see what is the best bargain at that moment and buy that. Why would that not work better than blindly investing regardless of what the market is doing? I also keep a little more set asside for great buying opportunities when situations that are obviously temporary cause a significant drop generating great buying opportunities. Opinions?

[@ChrisInvests]

Because many people don't have the common sense (or don't want to put in the effort) to do what you're doing 🤷‍♂️

[@minionkoto4780]

What if your lump sum was invested at the peak before the crash, you'd be miserable and probably won't have the emotional quotient to stay put. DCA prevents you from acting stupid hence better returns in the long run. 😂😂😂

[@healthiswealth7899]

why did you say it doesn't work then go on to show us it does work? ok you may get a bit less on your returns but it is by no means a failed investment.

[@michaelcurtis106]

There's one thing you didn't account for in your calculations - volatility. If the market went straight up every year, dollar cost averaging wouldn't work as you illustrated in your video. However, because the market goes up and down constantly, dollar cost averaging forces you to buy more shares when they are cheap and less shares when they are expensive. That's where the "average" comes into play. You're paying an average price per share on your investments. The more volatile your investments, the better you will do with dollar cost averaging.

[@birdofpassage9875]

DCA is a hedge against sequencing risk but if it is held longer than the sequence anywathan it it is irrelevant due to inflation. The way I see it, cash is trash and should only ever be in its natural state as a vehicle in short term holdings.

[@valicourt]

Hey it worked in the past so it MUST work in the future right. Right.

[@ksfinancials-investingands791]

Thank you the information was useful. For sure our goal is to invest slowly as well so strategy works properly! For sure people who don't know what they do it is better to use this strategy and try the long-term investment!

[@DiogenesNephew]

Yes, I also advise putting a lump sum of cash into the market at absolute bottom lows. Doesn't really matter what you compare to that, that's always going to give the best returns. So what's the point of this video? Seems like you should use less extreme examples for lump sum investing and use a full extrapolation to compare.

[@MichaelJosephJr934]

It's really simple. If the stock goes up it works. If it goes down it does not.

[@anunnamedcell7494]

wtf

[@TheBlueQuasar]

Not really.... DCA works in every case except when the market goes down and keeps going down. And that scenario does not happen, never has over a 10 year period or longer. The "magic" of DCA is when the market goes down, you buy more units, and when the market goes back up you have earned a profit. Doesn't everyone buy gasoline/petrol when the price goes down? If you could buy it today and sell it ten years from now you would make a killing. But most people can only buy a tankful at a time. Imagine you buy a tankful every week, but you saved each tank to sell later. Pretty good chance that ten years from now you could sell ALL of that fuel for a profit.

[@mp40girl]

Just the opposite. DCA works like shit in a bull market because you keep lifting your cost along the way, buying higher and higher. If you don't have a lump sum, DCA is the default, no problem. But if you do, DCA is a type of market timing. The expectation is that the market will go lower, but the problem is, nobody knows when. You DELAY the risk of investing at the peak. You don't ELIMINATE the risk, because you never know whether the market will tumble RIGHT AFTER you put in the last portion.

[@iamthere135]

@@mp40girl Dcaing a lump sum is not timing the market:/ two things that was not mentioned in this video is that dcaing lowers your volatility significantly of your overall portfolio. Also the psychology of people who lump sum are petrified if it drops 20% and then sell. Which so so so so many people have done!

[@grinder5000314483]

I've been finding a decent strke price then dollar cost average after

[@osvagt]

Should you advice your kids to throw in a big bag of money in on our times Apple, Tesla? If you don't have any larger interest of the "market", I would recommend option #3, the golden middle way,....but who am I to give financial advice? The herritage should prolly been invsted in the first year

[@haydanUK]

Thank you for video 40 years is a very long time! I’d like a see a video on dca method on BTC plz

[@Citizen_X.]

With crypto having too much volatility and shorter Bull cycles, DCA seems like a good fit. People who bought lump sum at the top, when BTC was 20K, would have definitely gained more BTC if they waited for stuff to cool down a little or bought more as it went down. FOMOing is the downfall of many in crypto.

[@jonathanfoster2263]

you dont get those lump sums very often if your like me, therefore DCA is the only option, unless I want to wait to build a lump sum but that would be foolish

[@janosd4nuke]

Basicly DCA works, if we are expecting a crash soon but not yet imminent and predictable enough to be eable to wait out and push the lump some once the market tanked.

[@janosd4nuke]

@Jee Vang Yeah really healthy attitude there dude, keep up the good work. I basicly just rephrased 5:34 . Also YOUR 3rd sentece basicly agrees just phrased to seem like lecturing without actually saying anything different. Was that on purpose and just wanted to contradict, or are you so dense you haven't even noticed. Pitiful.

[@sidgargate9740]

This video does not consider investing initial $6000 in a fixed deposit /bank. One can just withdraw $67 every month, and keep getting fixed interest on the rest, which will also get compounded. Surely that will be more than 20k

[@therealslimshady25_]

Didn’t he only make more money with the lump sum because he started investing with 7,200$ rather than when he started with only 3,200$? I would you assume if you started with more you would end up with more in the end

[@smallmj2886]

I different comparison would be regular investing vs saving up for a lump sum investment.

[@benden5095]

But some people don't have lump sum to invest and that's why dollars cost average works for us. Should I wait 10 years to save up money to invest? I would be losing out on much more than the simple $20,000. DCA works plain and simple, if you have lump sum then invest that but most people don't.

[@quigon1]

Great video. thank you. Can you go over the difference between mutual funds and ETFs with the pros and cons of each?

[@NextLevelLife]

Yes I can! Though there are some other viewer requested videos I still have to do, so I may not be able to make it right away, but I will add it to my list 😉!

[@peaceful4you408]

Limp sum investing and DCA is comparing apples to oranges. Investing professionals have been saying this for years. No either is better. The strategies are both very different ways to build significant wealth

[@saqued]

Can I ask why you don't do this study without the lump sum of the deposit, not everyone have a chunk of money like that. It could be someone who is just starting to invest and DCA is the only way for them.

[@anunnamedcell7494]

True. DCA is the only possible way for most. Altough if someone is willing to take the risk, they can get a personal loan from the bank and invest that in a lump sum. This does give huge returns but its risky.

[@charliesims7302]

You are missing one key piece of information. Timing the market is impossible. Dca works because no one knows when the valley will be. This is especially true for the average amateur

[@inertiaforce7846]

Bingo.

[@gymclassfinance]

What do you guys think of my explanation of dollar cost averaging?

[@musicuniverse1356]

Your talk about 1980 and the S&P 500 about how low it was demonstrates that any idiot could have become a successful hedge fund manager if they attracted enough investors and charged those high fees.

[@juju10683]

This isn't really an apples to apples comparison. If you have a lump sum that you inherentes of course you should invest. Dollar cost averaging is invest as you earn vs saving up the lump sum. Also "lump sum" is a relative term

[@beansontoast4391]

The bald character looks like Jeff Bezos

[@amolsw]

DCA with aggressive investment in *bear market* will give better returns

[@7Earthsky]

People that DCA still think like gamblers and want to time the market...They just don't know the difference between long-term, upward trends and short term volatility fluctuations.

[@michaelcurtis106]

Dollar cost averaging is putting the same amount of money into an investment on a periodic basis (monthly, yearly, etc.) regardless of what the market is doing. It's not "timing the market" because you're doing it at regular intervals. The idea is that you buy more shares of your investment when prices are cheap and less shares when they are expensive. By doing this, the share price you pay over time is getting averaged - hence the name (Dollar Cost AVERAGING). This means that the more volatile your investment is, the better this strategy would work. Less volatile investments would not benefit as much from this strategy. The problem is that volatility was not discussed in this video or factored into the calculations that he used which is why it looked worse than it would have been.

[@VIEWMARY001]

DCA is better on pull backs

[@RandomVideos4U]

Is this practical phycology?

[@avelmira]

Unless you get a generous inheritance, most people will only have a smaller fixed amount to invest every month. I guess you can save up cash and wait for a big event such as COVID19 or irresponsible greedy bankers to tank the market then pounce... but otherwise, dollar cost averaging would make sense on a "normal" market where no shit is hitting the fan and people make a responsible habit of saving and investing. Fact is, we don't know when the next big tank is going to happen so we can't afford to hold cash for years to have it not work hard for us even just a little bit (not so little that we'd put it in savings or buy bonds).

[@gcg8187]

i already knew this! basic math!

[@chasejoseph]

Put it into an index fund dorks

[@anunnamedcell7494]

etfs

[@MichaelJosephJr934]

I disagree. Yes this method works with Apple stock because it was a very successful company. You should do this example with the S&P.

[@Collasseum]

He did didn't he

[@LinusLimMJ]

yeah dca works if you do it with a strong company if you do it with a poor company, then you're basically buying it till it goes out

[@sbkpilot1]

this video makes no sense, if it works out in the short term (in your example he has double after 5 years) then he would end up with way more money in the long term due to compounding on a much higher base amount after 5 years. The truth is that DCA or lump sum is essentially a crap shoot, there is virtually no way in advance to figure out which one is better because that essentially is timing the market and predicting the future.

[@e7venjedi]

How does that math work if in '78 and '79 he was getting to buy the market at even more of a sale price than in 77?.... Umm...

[@h3xploitgameing974]

Does blabbering on for a full minute before starting the video work? Does it actually work?

[@qwertyuiopasdfghjkl2556]

Actually this techniek is best in a bear market, its a way to get you money back

[@rameshkumars9226]

great video... interesting.

[@stephenpoole6415]

This is a poor example. Nobody is saying to keep your money in cash and spread it out. Dollar cost averaging is about not timing the market and investing steadily each month.

[@lucasatilano8008]

It depends on how long the market is down, if you try the nasdaq 100 ($QQQ) from 2000 dollar cost averaging makes a lot more sense

[@proHannuTorrekens]

This video is misleading. Yes if you invested all in spy in 2017 you'd be on profit but if you did a dollar cost average for two years from 2017 with the lump sum, you would have bee way better off.

[@tonyd3987]

You clouded DCA and put other variables into it. DO AN EXAMPLE FOR 1 YEAR OR 6 MOS AND COMPARE 2 INVESTORS. WHAT IS THIS DIFFERENT AMOUNT CRAP. INVESTING ONE AMOUNT THEN AFTER 3 YEAARS COMING BACK AND CHANGING THE AMOUNT. STICK WITH 1 FIXED AMOUNT FOR ONE PERSON. AND PICK ONLY 1 YEAR R EVEN 6 MOS AND YOU CAN GET YOUR POINT ACROSS. WORTHLESS

[@sabr2th330]

Sorry but examples are too vague. Im a new invester and you lost me on the first time. Make it simple. To complicated and illustrations are useless. Thanks anyways

[@wiseman4160]

I have a rule i follow that i never buy more shares of a stock when the stock is going down, why because the big buyers might be doing a sell off or the big buyers are selling because they know something you don't. So i don't do value averaging or dollar cost averaging. When i would put more shares into a stock is when the stock price is going up and then i know for right now i have a good investment. Never add more money when the stock is having a bad month or a bad year. And there is two kinds of people that will disagree with what i just said, First person is the small percentage of people that actually make money doing the opposite of what i just said, and the second person will lose some or lots of their money and then go crying to there mom and tell anyone that will listen that buying stocks is gambling.

[@NextLevelLife]

Interesting perspective. What are your thoughts on the often given financial advice of "buy low sell high"?

[@wiseman4160]

If i'm looking at a stock chart and say the stock is at $50 a share but 5 months ago it was $80 a share, this stock i won't buy low and hope to sell hi because i see too much risk. But if the stock is doing well most years and the stock price shows me that it could be a good long term investment then i would buy low and sell high. Lots of other people like lots of risk and would consider my way of thinking as boring.

[@NextLevelLife]

I wasn't trying to imply that your strategy was boring (or stupid or wrong or anything like that). It was just a view that was different from mine so I was curious as to what brought you to it. No matter how long I study finance there's always more to learn. Thanks for sharing!

[@wiseman4160]

That boring comment wasn't directed at you was just saying i understand why some would find my way of thinking boring because it doesn't come with as much risk. Thanks for comment on my comment.

[@NextLevelLife]

No problem, thanks for the response!

[@gamma_v1]

Your video is 8 minutes and you spend a whole one minute chitchatting. This is so annoying.

[@omarfarique6304]

Don't use music

[@cosmefurtado6467]

Absolutely misleading! You obviously don’t have the big picture clear. He ends up with more money, not because dollar cost averaging works bad, but simply because in your example he invested ALL the money at the lowest price EVER right in beginning of the S&P (which is totally irresponsible since you don’t know how the S&P is gonna behave).

[@Cheldewier]

Animation very anoying

[@arm.workouts]

Your music is annoying