Dollar Cost Averaging – Episode #27

Protect yourself from market volatility by Dollar Cost Averaging.

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Tea drank in today’s episode:

Stash Premium Tea, Pomegranate Raspberry Green

Book mentioned in today’s episode:

The Intelligent Investor

Links mentioned in today’s episode:

Time Is An Investors Best Friend – Episode #5

  • Thai

    Do you (or anyone else) have any thoughts on Dollar Value Averaging? From what I've read, it is an optimized version of DCA, but with a tad more work involved.

  • Hey Thai, thanks for bringing up a worthy alternative to DCA. The major thing I don't like about DVA is that to properly execute it, you need decide on a target portfolio value i.e. total amount of money you want to end up with or a target amount to increase your investment by each investing period.

    If one feels confident and is up to that task, more power to them. For many this presents potential pitfalls.

    In Thursday's episode I do mention a much less eloquent way to take advantage of market lows when using a DCA approach, and that is just buying a crap ton more at known lows then would be usual in your DCA plan.

    The other thing that bothers me with DVA is if you follow it strictly, in some months, large ups in the market will force you to take money out. Exposing you to taxes and the such. DVA is really is an a much more active approach towards investing then the passive DCA.

    Like most articles say (here is a good one: http://www.investopedia.com..., it is really up to you and your temperament. For the typical person I believe DCA is a better choice.

    Thanks for adding a worthy addition to this episode through your comment!

    Cheers.

    Ethan

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