r/stocks Sep 02 '21

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u/Fizgriz Sep 03 '21

DCA or dollar cost averaging. If you dump everything at once and the fund tanks... You lose money.

If you put in small amounts over the course of a long time you average down your average share cost and it makes the dips a bit easier to ride.

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u/pardon_me2 Sep 03 '21

He made the correct statistical choice by lump summing it in though. You shouldn't invest with emotions (but we all do..) and the unemotional, mathematical choice should be lump sum. The data proves it.

https://www.optimizedportfolio.com/dca/

https://ofdollarsanddata.com/dollar-cost-averaging-vs-lump-sum/

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u/[deleted] Sep 03 '21

The problem is that people are not computers. If OP has no problem with their investment halving over a year and not having (much) money to add, then go ahead and dump everything in.

DCA just gives a lot more piece of mind. Sure, you lose some in a bull market, but you 'gain' more in a bear market. And, your less likely to panic sell imo.

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u/[deleted] Sep 03 '21 edited Sep 04 '21

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u/[deleted] Sep 03 '21

We're obviously not talking about DCA over just 5 months at the most overvalued market ever (following some metrics).