The 5 Most Common DCA Mistakes Everyone Makes | Dollar-Cost Averaging

ALMOST everyone has made these 5 common mistakes while practicing Dollar-Cost Averaging (DCA) in their investing routine. Invest with Interactive Brokers → www.interactivebrokers.com/mk...
🔴 Beginner's Guide to DCA→ • Dollar-Cost Averaging ...
⬇️Timestamps:
0:00 → Introduction
0:37 → (1) Letting emotions take over
2:20 → (2) Ignoring the macroeconomics
5:09 → (3) Not rebalancing portfolio periodically
7:45 → (4) Not maintaining a healthy cash buffer
9:03 → (5) Ignoring the brokerage fee
10:03 → Conclusion
Dollar-cost averaging (DCA) is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset in an effort to reduce the impact of volatility on the overall purchase. The purchases occur regardless of the asset's price and at regular intervals. In effect, this strategy removes much of the detailed work of attempting to time the market in order to make purchases of equities at the best prices.
One common mistake made by many investors is attempting to “time the market,” but DCA can remove the need to time the “top” or “bottom” in the market - which are typically futile attempts, even for investment professionals.
Over time, the average cost per share you spend will probably compare quite favorably with the price you would have paid if you had tried to time it. In the long run, this is a highly strategic way to invest. As you buy more shares when the cost is low, you reduce your average cost per share over time.
For investors, especially for value investors and retail investors, the simplicity of DCA can be a useful tool for investing patiently and protects against the impulse to risk the entire amount for higher returns.
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Disclaimer: This content is provided by a paid Influencer of Interactive Brokers. Influencer is not employed by, partnered with, or otherwise affiliated with Interactive Brokers in any additional fashion. This content represents the opinions of Influencer, which are not necessarily shared by Interactive Brokers. The experiences of the Influencer may not be representative of other customers, and nothing within this content is a guarantee of future performance or success.
None of the information contained herein constitutes a recommendation, promotion, offer, or solicitation of an offer by Interactive Brokers to buy, sell or hold any security, financial product or instrument or to engage in any specific investment strategy. Investment involves risks. Investors should obtain their own independent financial advice and understand the risks associated with investment products and services before making investment decisions. Risk disclosure statements can be found on the Interactive Brokers website.
Interactive Brokers is a FINRA registered broker and SIPC member, as well as a National Futures Association registered Futures Commission Merchant. Interactive Brokers provides execution and clearing services to its customers. For more information regarding Interactive Brokers or any Interactive Brokers products or services referred to in this video, please visit www.interactivebrokers.com.

[@ZietInvests]

📌Learn more about Interactive Brokers → www.interactivebrokers.com/mkt/?src=zietPY2&url=%2Fen%2Fwhyib%2Foverview.php%3Fnored%3Dt

[@KaulitzJade]

Thank you for making this video! You are a clear voice among the noise. Thanks for giving us a look at your portfolio and how you made certain decisions.

[@ZietInvests]

Thank you so much for this! I try my best to share my learnings along the way!

[@chrisaustralianfinance9204]

100% agree. I think its good to set up a consistent buy mechanism to DCA into the market, but if you see a 10% pullback, you shouldn't be sitting on the sidelines just because you're following a DCA strategy. Buying consistently while taking advantages of dip opportunities based on the information you have in my opinion is the best way to move forward.

[@ZietInvests]

Well said!!

[@harikrishnanchandramohan4209]

What if there was 20% pullback if you were following the dca strategy. The money that went into 10% would have been in the 20%. Just stick with the rules. don't overthink.

[@eehuntan8947]

Yea I made a few mistakes which u pointed out. Thank you for the thoughtful reminder Ziet!

[@ZietInvests]

I'm glad you resonated with my points Ee Hun!😊

[@kimrue6860]

Thank you for making the great topic to remind us in the confusing circumstances👍😍

[@ZietInvests]

You're most welcome Kim! Have a great weekend ahead 🥰

[@kannanragupathi4651]

Great insight…thank you so much Ziet .

[@ZietInvests]

Thank you Kannan! And so glad to see you back here every week🥰

[@ALIF-ed8jr]

This is important topic.. nice to hear this from you.

[@ZietInvests]

Hopefully this gives you more insights!😊

[@alpacino6902]

Thanks for explanation and tips,Good luck!

[@ZietInvests]

Cheers brother!

[@DarenYoong]

Great points on DCA, Ziet!

[@ZietInvests]

Thank you Daren😊 Have a great weekend!

[@yeesunher6278]

Keep up the great work!

[@ZietInvests]

Thank you! 🥰

[@emyt4461]

Thanks again for great videos keep it up

[@ZietInvests]

Cheers Emy! Glad you liked it 😊

[@ako_ito]

dude, thanks for this video. appreciate it.

[@ZietInvests]

You're most welcome my friend!

[@lukev539]

Just buy the red, it’s scary, but once you master it you end up winning. It’s like the math formula you can’t really grasp fully but you use it anyway because it works. Unless you’ve gotten in at the top or just something not worth investing in.

[@ZietInvests]

Couldn't have said it any better, its so counter-intuitive right?!

[@BoonTee]

Good stuff!

[@ZietInvests]

Thank you Boon Tee!

[@secretpianoboy]

Commercial and political risks are things to consider how the macroeconomics has changed. Rebalance portfolio regularly

[@ZietInvests]

Agree!

[@ericong9876]

HI Ziet, Will you encourage take out EPF and invest in US market like ETF or stock?

[@ZietInvests]

Hi Eric, if it is purely withdraw with the aim to earn higher investment yield over in the US market - not something I would do myself

[@rl5510]

thanks Ziet, any view on India index funds like INDA, irish domiciled ones? thanks

[@ZietInvests]

Hi R L, I'm not particularly fancy about emerging markets as I don't quite understand them, and their political risks are way higher than developed countries, hence its not something within my scope of consideration

[@rl5510]

@@ZietInvests thanks. Yup that makes sense, I'm also not too comfortable investing solely in US, in case anything, what other markets would u consider investing geographically if you were wanting to diversify outside of the US. Thanks again for all ur inputs

[@marwandaou9819]

I need to learn more about DCA method, what do you recommend? What about you make a video about DCA? Your videos are always clear and genuine Courage

[@ZietInvests]

Hi Marwan, you can always read up online about DCA - try looking around forums too and see how people do it, it's not a very complicated subject because the principal of it is basically to invest consistently and not try to time the market. Check out my previous video on DCA, hopefully this gives you more light: kzbin.info/www/bejne/Y4m4ZWqBodSIbdU Let me know if this helps!

[@david_lifeandgames]

If new to investing.. Try buying ETFs like VUAA/CSPX, VWRA. Ziet did a video in them before. Won’t go wrong with them.

[@rainbowhorse09]

Thank you Ziet

[@ZietInvests]

You're most welcome!!

[@NplusO88]

Ziet, can you do a video on how to buy China stocks from Malaysia? Use which broker?

[@ZietInvests]

Hi Nicholas, you can use Interactive Brokers to do that actually! Link in pinned comment 😊

[@ngchongsin2009]

That is good video

[@ZietInvests]

Thank you Martin 🙏🏻🙏🏻

[@garyschmelzer]

Is it OK to dollar cost average I currently put a set amount of money every day Monday through Friday to my stock and ETFs or as once a month better

[@ZietInvests]

Hey Gary! It really depends on your financial goals and cash flow availability I'd say.

[@r2ishara]

How dare you drop the fork mic and hang with fancy equipment like that! O lord 😂

[@ZietInvests]

😂😂😂😂 sowieeeeeeeee

[@momoba123]

Can u share your current etf holdings? Stocks for long term? Stocks for good dividend?

[@ZietInvests]

Hi Mei Ling, what you see in this video is what I have in my investment portfolio, i dont hold any other ETF at this moment (Except a little bit in ARK ETF)

[@momoba123]

@@ZietInvests thanks i dumped my small holdings of arkf at a loss of course...very disappointed

[@benjaminchang8210]

like button smashed... any chance of bringing back the fork? absolutely fantastic contents!

[@ZietInvests]

Thank you Benjamin! For the fork...hmmm.....we'll see 😂 Maybe for some shorts series or something!

[@Bryan871110]

My strategy is to DCA 15% of my salary on the 1st Monday monthly into: USXF (USA ESG ETF) - 33% DMXF (Developed Markets ESG ETF) - 33% EMXF (Emerging Markets ESG ETF) - 17% SDG (UN SDG sustainable future thematic ETF) - 17% for the rest of my life!

[@ZietInvests]

Thanks for sharing😊 All the best!!

[@Sony-ox7wx]

You can always sell covered calls for cash

[@MengShengVincent]

In my opinion, dca is only applicable for those wonderful business with undervalue or fair value valuation must have strong cash flow, business growth and dividend growth. Moreover, the company must not in a cyclical industry such as commodities. If the company that you dca before, now becomes not a good business or sunset industry, as an investor need to start cut loss even though you are making losses. The most important lesson, never dca on a sunset industry company.

[@ZietInvests]

Hmmm yes and no: 1. Good cash flow/growth - not all amazing businesses have good cash flow when they just started, and can take some time before they see profitability (Tesla back then) 2. Cyclical industry - may not be bad as well, Apple is part of a cyclical industry 3. Sunset industry - I agree with you and can see where you come from, but on the contrary, investors that lean towards capital preservation tend to lean towards sunset industries for the stability and proven track record since its within their comfort zone (not necessarily wrong, but also not something i like either) 4. Cut loss - yes! learnt this the hard way, which I feel many will only learn this the hard way because its easier said than done on paper, but it feels completely different in actual experience!

[@david_lifeandgames]

Please review Go+ and KDI Save and Versa bro. You have not covered them in your video. They are a good place to store extra cash for fast withdrawal rather than putting in savings account earning 0.

[@ZietInvests]

The main reason why I don't cover them is because they are mostly short-lived - i.e. 2-3% p.a. rate only last for a 1-2 year promotional period, I'd prefer the upside of having cash that I can deploy into my business or investments whenever I need them since the yield is nothing impressive Though let me take a further look at them, I might miss a thing or two :P

[@Pyro712]

Funds are safeu

[@ZietInvests]

Which fund tho? :P

[@tj81090]

IMO, another DCA mistake is buying the dip. When the stocks goes down, the common thing we hear is buy the dip, it's not wrong, but as u said, lower can go lower. Example would be China stock like u mentioned. Unless one is an early entry, those who buy the dip will still be in the red. Not only that, u would have ended up having more shares of than u probably plan. Teladoc is another example, same for Sea Ltd. Our local example would be top glove. DCA when the stock is in a downtrend isn't really a good idea. Because when it goes up, u will only break-even. Instead, why not DCA when the chart of the stock is going on a up trend, aka averaging up. Just my opinion.

[@ZietInvests]

Hmmm yes and no in my opinion, because ultimately it still depends on the asset you are investing in - obviously younger/yet to be established companies bear more risk compared to established companies with proven track record (without even touching political risk!) That said, the principal of DCA is to invest consistently, because if you are only DCA-ing during its up trend, that is almost equivalent to trying to time the market and only buy when everything is going up, and more often the time this would lead to buying all the way up to the peak. Again, highly dependent on the asset we're talking (commercial & political risk in mind), but not to be mixed with the strategy itself, choosing the right company (with both risks weighed off) should be a separate thing by itself😊

[@muhammadalenra353]

Political risk is what haunting us forever in Malaysia. Because Malaysia is manages by clowns.

[@ZietInvests]

🥲🥲

[@crystalcrypto_]

Thought this video was about DCA, wasting time..