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The part about not buying into the market all at once as wrong and has been known to be wrong for decades. Several studies to that effect are linked from the W
by ikeboy 7y ago
The part about not buying into the market all at once as wrong and has been known to be wrong for decades.
Several studies to that effect are linked from the Wikipedia page on dollar cost averaging.
- eb0la 7y agoI disagree with you: You're talking about what happens under a rational behavior. If you get a lot of money suddenly, that's not the case. If you invest it all at once in the market, and get by chance high returns quickly, you could start gambing (investing) very quickly.
- basch 7y agothat sounds like its own problem to address, not a reason to avoid investing your money.
- 1123581321 7y agoYou misread. The advice was to invest over time to get used to the idea, so by the time it’s all invested, they are comfortable with and calm about that size of investment.
- ikeboy 7y agoNo. That was the secondary reason given in the next sentence, not the main reason.
- 1123581321 7y agoYou’ve misread. “Note that don't buy in all at once, diversify not just the investments but also by time, so you're not buying all into the stock market at once.” This is the recommendation. This also gives you time to think and reflect about how you want to use your money and what legacy you want,” This is the main reason, comfort/acclimation. “while also getting some returns on investments” This is saying you’ll get better returns than cash, so the price of structuring your investment for comfort will be somewhat mitigated. It’s not advising DCA or suggesting outperformance of or parity with investing everything up front.
- ikeboy 7y agoDiversifying by time is DCA. If it was the main reason it wouldn't be "also".