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The best strategy is to buy regularly with the same amount of dollars without thinking about the current price. Just think of it as your long-term savings accou
by Geee 5y ago
The best strategy is to buy regularly with the same amount of dollars without thinking about the current price. Just think of it as your long-term savings account, and your expectation should be to beat inflation.
- keymone 5y agoit's called DCA: https://en.wikipedia.org/wiki/Dollar_cost_averaging https://en.wikipedia.org/wiki/Dollar_cost_averaging
- esalman 5y agoThis strategy works if you are financially disciplined, have emergency funds sorted etc. That's not how most people operate though.
- latchkey 5y agohttps://www.morningstar.ca/ca/news/197437/dollar-cost-averaging-doesnt-work.aspx https://www.morningstar.ca/ca/news/197437/dollar-cost-averag... Kaplan: Long-term investing works when you keep your money in the market for long periods of time. When you're doing dollar cost averaging, you're not keeping your money in the market over the full period of time. You are keeping much of your money out of the market for much of the time. So, you're not getting the full benefit of long-term investing. Furthermore, when you're dollar cost averaging, you're basically placing a bet. You're placing a bet that the market will be going down shortly after you get the money and that eventually the market will come back up towards the end of the period as you're putting more money into the market.
- Geee 5y agoDCA is a good strategy when the asset is very volatile, and you want to minimize the timing risk. If you're buying a low volatility index fund, then it doesn't make sense. This applies only when you have a large amount of money to begin with, because you basically have to DCA if you're investing from your monthly earnings. Lots of people have a fear of investing and don't enter the market at all. DCA is a fool-proof strategy which can minimize the fear and is easy to follow for beginners. In the case of Bitcoin, most people simply don't enter at all, because they're too afraid of the short-term movements in the price.
- wsostt 5y agoThis is obviously true but most people DCA into the market because they’re investing money as they earn it. The put $X I to their brokerage account on payday and buy more indexed ETFs.
- latchkey 5y agoSource for "most people" please.