Dollar Cost Averaging | Does DCA Work in 2020?

You cannot time the markets. It is impossible. So how should you decide when to buy? When is the best time to buy stocks? When is the best time to sell stocks? Many people suggest dollar cost averaging, but is dollar cost averaging the best strategy? Look across the sea of videos on YouTube, and you will see many people telling you dollar cost averaging is the best strategy. Is that true? Watch this video to the end, and you will learn what dollar cost averaging is, what lump sum investing is, and which is better. This video will be 100% based on research with real numbers and the results will surprise you.

Dollar cost averaging is averaging out the cost of investments over a prolonged period of time. Investments are made in regular smaller increments, often on a weekly or monthly basis. Lump sum investing means investing all available money for investing in a lump sum. Lump sum investing in the S&P 500 beats dollar cost averaging over a 24-month period in 77.8% of all months from 1997 to 2018. If we look at 1960 until 2020, lump sum investing is also better in 73.7% of all months. From 1997 to 2020, dollar cost averaging underperformed on a 24-month basis between 58 to 90% of the time across emerging markets, bitcoin, all US stocks, gold, treasuries, and a 60-40 stocks to bonds split. The longer the period of dollar cost averaging, the more certain it is that lump sum investing will prevail. Research conducted by Vanguard on the S&P 500 found that, over 36-month intervals, lump sum beat dollar cost averaging more than 90 percent of the time whereas it only beat dollar cost averaging about two thirds of the time over 12 months.

People often employ dollar cost averaging because they know they can’t time the market. Ironically, if you think dollar cost averaging is better than lump sum investing, you are still trying to the time the market. As demonstrated in the research in this video, lump sum investing is almost always better than dollar cost averaging. If you want to wait until the right moment or want to dollar cost average because you feel it is the wrong time, you are trying to time the markets and will usually lose money as a result. What should you do instead? If you have money to invest, invest it. It is as simple as that. Only invest the money you don’t need for other purposes, but if you have the money, invest it. Don’t wait. The sooner you have your money working for you, the sooner you will reap the rewards of those investments.

Have you been dollar cost averaging? Has any of this changed your opinion? Leave a comment below. I would love to hear from you. Also, please subscribe to this channel because I will be creating new videos for you every single week. As always, good luck with your investing.

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DISCLAIMER: All information and data on this YouTube Channel is solely for entertainment purposes. The information herein is based solely on my personal opinion and experience. All investments hold inherent risk, and the information provided on this YouTube Channel should not be interpreted as guidance, recommendations, offers, advice, or suggestions. Any ideas and strategies discussed on this channel should not be implemented without first considering your financial and personal circumstances or without consulting a financial professional.

Information was obtained from these articles:
https://ofdollarsanddata.com/dollar-cost-averaging-vs-lump-sum/

To anyone interested in the information used in this article, a majority of the charts were taken from this article. The article is excellent and highly recommend anyone watching to read through it.

https://www.investopedia.com/articles/stocks/07/dcavsva.asp
https://awealthofcommonsense.com/2018/05/the-lump-sum-vs-dollar-cost-averaging-decision/
https://dqydj.com/dollar-cost-averaging-vs-lump-sum/
https://i1.wp.com/www.millennial-revolution.com/wp-content/uploads/2016/07/dca_3.gif?ssl=1
https://www.justetf.com/uk/etf-profile.html?query=IE0005042456&groupField=index&from=search&isin=IE0005042456&tab=chart
https://www.moneyobserver.com/sites/default/files/Pound%20cost%20averaging%20versus%20lump%20sum%20investing.png
https://www.investopedia.com/terms/d/dollarcostaveraging.asp

Background images were taken by Willgard Krause, Pexels, and toodlingstudio.

Видео Dollar Cost Averaging | Does DCA Work in 2020? канала Stock Investment Analysis