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Lol. You don't even need AI for that 99% boiler plate. Save 6-12 months of expenses in cash, DCA the rest into total market stock index funds. But people still

Lol. You don't even need AI for that 99% boiler plate. Save 6-12 months of expenses in cash, DCA the rest into total market stock index funds. But people still pay expensive advisors to get worse results.

singpolyma3 2mo ago
I mean, never DCA anything that's terrible advice. But still better than what most people do.
- orsorna 2mo ago
  If you only have a fixed amount of money to put aside every month, DCA makes sense. That applies to 99% of people. Not terrible at all.
  - lotsofpulp 2mo ago
    That's not really choosing to "DCA", that's just not having enough money to not be able to "DCA". Which is what's so funny about 99% of people that talk about DCA...they don't have any other option.
  - zrail 2mo ago
    That's not really DCA, at least how I understand it. DCA is something like "I have $520,000 in cash right now today sitting in checking, I'm going to buy $10,000 a week of VTSAX for the next 52 weeks" which on average is a bad strategy. What you're describing is better analyzed as a continuing series of lump sum investments. You're investing as soon as you have cash available, not unnecessarily holding onto cash.
    - BeetleB 2mo ago
      This is the original definition of DCA, but by this point most people view DCA as what everyone else in the thread is talking about. Not a hill worth dying on.
    - FabHK 2mo ago
      BTW, you are correct technically that if the expected return of the investment is positive, then you maximise the expected return by putting in everything now all at once. However, maybe you want to reduce the variance. Or you want to trade off return and risk. Or you want to minimise regret. If you put all in at a certain price, and later the market moves down, you'll regret that you didn't buy cheaper, and think you timed it badly. If, however, you commit to a strategy of putting in say 5% per month over the next months, then a) you just automate it, and don't think about it anymore, and b) you don't really have a reference price at which you bought (sure, you can determine your actual cost basis, but who does that...) and thus avoid regret when the market tanks. Plus you reduce variance (by reducing the variance of your cost basis).
    - TacticalCoder 2mo ago
      > DCA is something like "I have $520,000 in cash right now today sitting in checking, I'm going to buy $10,000 a week of VTSAX for the next 52 weeks" which on average is a bad strategy. Yeah for a start if you're really planning to buy $10 K of a world fund pick one with stock options. Sell a PUT secured by the $10 K with a 7 DTE. This is already guaranteed better returns (but still a bad strategy) than this dumb way of DCAing. But when people say they DCA what they mean is basically: "I make $10 K net per month, I spent $6 K, I keep $1 K in cash and I invest the $3 K that are left". Which is actually not a bad strategy at all.
    - groundzeros2015 2mo ago
      Bad strategy? Or on average not optimal?
- sweetjuly 2mo ago
  DCA is not unreasonable advice given that most people's greatest enemy is themselves. DCA helps avoid the very emotionally upsetting feeling of you throwing money into a fund and it dropping 5% the next day. This emotional volatility can push people to make bad decisions (pull all their money out, try to time the market, stop investing, etc.). Scheduling your investment into smaller sums lets you diffuse the highs and lows in order to keep you steadfast.
yodsanklai 2mo ago
It's more complicated than that. You probably don't want all your equity in stock, unless you're young and you're confident you can keep your strategy when the AI bubble crashes. And what do you do with the part that isn't in stock? bonds? what are they? which ones to buy? Even the 6-12 months of expenses in cash doesn't apply to all people. That being said, I agree with the bad and expensive advisors, but I think financial planning is hard, and you really need to educate yourself.
groundzeros2015 2mo ago
An advisor gives you emotional support and helps you not fuck it up.
- swat535 2mo ago
  The problem with giving financial advice to people is that many struggle to pay their rent. Telling them to invest in index funds from an ivory tower is laughably misguided of the realistic situation they live in. After they pay their rent and feed themselves, they may have a little left over which they will simply spend on basic pleasures, or simply rack up debt to get by. The financial advice ignores the fact that we have people like Musk with a net worth of 600M while the rest struggle to afford necessities. The wealth inequality gap is simply too much to ignore and I worry that it will reach a breaking point.
  - groundzeros2015 2mo ago
    I don’t know what this has to do with financial advisors. People in that situation are not seeking investment advice.
    - swat535 2mo ago
      > People in that situation are not seeking investment advice Why do you think poor people often fall into get quick rich schemes? You don't think they are seeking advice?
      - groundzeros2015 2mo ago
        You just said they don't have enough money for investments. Why would they pay for an advisor? Can you clarify what you're trying to communicate on the topic of "financial advisors" other than a general class grievance before commenting?
  - Pragmata 2mo ago
    >The problem with giving financial advice to people is that many struggle to pay their rent. If you're struggling to pay rent... Your quality of life is too high and you need to reduce it. Straight up. This isn't a wealth inequality issue, it's a "you're overspending" issue.
francisofascii 2mo ago
The tricky part is which total market index funds? The S&P based ones are too AI focused, and don't give you the diversification they once did. You also don't want to invest in just one countries stock market. And bonds, should be a mix of maturity, governments (not just the US), corporate, etc.
- Kirby64 2mo ago
  Total market is total market. Investing in a “total market minus X” fund means you lose exposure to X (whatever that is) for good or bad. That’s your judgment call, but not really an edict. Same problem with “you can’t just invest with US stocks” - US stocks are global at this point, and have significant exposure to the international market. By investing in specific international funds you’re more or less saying “international minus the US”. You can change your weighting if you want to, that’s your prerogative, but don’t be surprised if it doesn’t lead to nearly as good of average returns.
- fittingopposite 2mo ago
  VT and chill

singpolyma3 2mo ago

I mean, never DCA anything that's terrible advice. But still better than what most people do.

orsorna 2mo ago
If you only have a fixed amount of money to put aside every month, DCA makes sense. That applies to 99% of people. Not terrible at all.
- lotsofpulp 2mo ago
  That's not really choosing to "DCA", that's just not having enough money to not be able to "DCA". Which is what's so funny about 99% of people that talk about DCA...they don't have any other option.
- zrail 2mo ago
  That's not really DCA, at least how I understand it. DCA is something like "I have $520,000 in cash right now today sitting in checking, I'm going to buy $10,000 a week of VTSAX for the next 52 weeks" which on average is a bad strategy. What you're describing is better analyzed as a continuing series of lump sum investments. You're investing as soon as you have cash available, not unnecessarily holding onto cash.
  - BeetleB 2mo ago
    This is the original definition of DCA, but by this point most people view DCA as what everyone else in the thread is talking about. Not a hill worth dying on.
  - FabHK 2mo ago
    BTW, you are correct technically that if the expected return of the investment is positive, then you maximise the expected return by putting in everything now all at once. However, maybe you want to reduce the variance. Or you want to trade off return and risk. Or you want to minimise regret. If you put all in at a certain price, and later the market moves down, you'll regret that you didn't buy cheaper, and think you timed it badly. If, however, you commit to a strategy of putting in say 5% per month over the next months, then a) you just automate it, and don't think about it anymore, and b) you don't really have a reference price at which you bought (sure, you can determine your actual cost basis, but who does that...) and thus avoid regret when the market tanks. Plus you reduce variance (by reducing the variance of your cost basis).
  - TacticalCoder 2mo ago
    > DCA is something like "I have $520,000 in cash right now today sitting in checking, I'm going to buy $10,000 a week of VTSAX for the next 52 weeks" which on average is a bad strategy. Yeah for a start if you're really planning to buy $10 K of a world fund pick one with stock options. Sell a PUT secured by the $10 K with a 7 DTE. This is already guaranteed better returns (but still a bad strategy) than this dumb way of DCAing. But when people say they DCA what they mean is basically: "I make $10 K net per month, I spent $6 K, I keep $1 K in cash and I invest the $3 K that are left". Which is actually not a bad strategy at all.
  - groundzeros2015 2mo ago
    Bad strategy? Or on average not optimal?
sweetjuly 2mo ago
DCA is not unreasonable advice given that most people's greatest enemy is themselves. DCA helps avoid the very emotionally upsetting feeling of you throwing money into a fund and it dropping 5% the next day. This emotional volatility can push people to make bad decisions (pull all their money out, try to time the market, stop investing, etc.). Scheduling your investment into smaller sums lets you diffuse the highs and lows in order to keep you steadfast.

yodsanklai 2mo ago

It's more complicated than that. You probably don't want all your equity in stock, unless you're young and you're confident you can keep your strategy when the AI bubble crashes. And what do you do with the part that isn't in stock? bonds? what are they? which ones to buy? Even the 6-12 months of expenses in cash doesn't apply to all people. That being said, I agree with the bad and expensive advisors, but I think financial planning is hard, and you really need to educate yourself.

groundzeros2015 2mo ago

An advisor gives you emotional support and helps you not fuck it up.

swat535 2mo ago
The problem with giving financial advice to people is that many struggle to pay their rent. Telling them to invest in index funds from an ivory tower is laughably misguided of the realistic situation they live in. After they pay their rent and feed themselves, they may have a little left over which they will simply spend on basic pleasures, or simply rack up debt to get by. The financial advice ignores the fact that we have people like Musk with a net worth of 600M while the rest struggle to afford necessities. The wealth inequality gap is simply too much to ignore and I worry that it will reach a breaking point.
- groundzeros2015 2mo ago
  I don’t know what this has to do with financial advisors. People in that situation are not seeking investment advice.
  - swat535 2mo ago
    > People in that situation are not seeking investment advice Why do you think poor people often fall into get quick rich schemes? You don't think they are seeking advice?
    - groundzeros2015 2mo ago
      You just said they don't have enough money for investments. Why would they pay for an advisor? Can you clarify what you're trying to communicate on the topic of "financial advisors" other than a general class grievance before commenting?
- Pragmata 2mo ago
  >The problem with giving financial advice to people is that many struggle to pay their rent. If you're struggling to pay rent... Your quality of life is too high and you need to reduce it. Straight up. This isn't a wealth inequality issue, it's a "you're overspending" issue.

francisofascii 2mo ago

The tricky part is which total market index funds? The S&P based ones are too AI focused, and don't give you the diversification they once did. You also don't want to invest in just one countries stock market. And bonds, should be a mix of maturity, governments (not just the US), corporate, etc.

Kirby64 2mo ago
Total market is total market. Investing in a “total market minus X” fund means you lose exposure to X (whatever that is) for good or bad. That’s your judgment call, but not really an edict. Same problem with “you can’t just invest with US stocks” - US stocks are global at this point, and have significant exposure to the international market. By investing in specific international funds you’re more or less saying “international minus the US”. You can change your weighting if you want to, that’s your prerogative, but don’t be surprised if it doesn’t lead to nearly as good of average returns.
fittingopposite 2mo ago
VT and chill