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No. Since the stock market goes up on average over time, it's always correct by expected value to invest sooner, rather than holding money back to DCA in insta
by vikingerik 4y ago
No. Since the stock market goes up on average over time, it's always correct by expected value to invest sooner, rather than holding money back to DCA in installments. Intentionally doing DCA if you have a sum that you could invest sooner is trying to time the market.
DCA is a useful side effect when you're investing regularly, but on average it does not beat investing sooner.
- scarmig 4y agoDCA should be thought of as a portfolio strategy that is X% in your nominal portfolio and 100-X% in dollars and gradually shifting to 100% your nominal portfolio. It's an attempt to hedge against negative equities early on, but there are better hedges, and if your risk aversion makes you not want 100% equities early on, you probably don't want 100% equities later on either.
- andrewf 4y agoOn average, sure, but what if you're worried about outcomes approaching the worst case (say 10th percentile)?