Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: DCA or one fell swoop?
Old 08-24-2006, 05:29 AM   #41
Dryer sheet aficionado
 
Join Date: Oct 2003
Posts: 29
Re: DCA or one fell swoop?

Quote:
I really liked his closing paragraph where he wonders why it is then that so many people persist in believing that dollar cost averaging is better.
His answer:if the market dips, people will be happy because DCA will be saving them money; and if the market goes up, people will be happy regardless.
I suspect it's because people who invest with every paycheck like to say (with pride):
"I do DCA!"

PS#1 Because some believe that daily, weekly and monthly up / down days are quite different, I've modified the spreadsheet to do these.

PS#2 There's a dark side to DCA.
__________________

__________________
gummy is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: DCA or one fell swoop?
Old 08-24-2006, 07:57 AM   #42
Full time employment: Posting here.
 
Join Date: Mar 2005
Posts: 699
Re: DCA or one fell swoop?

Quote:
Originally Posted by gummy
I suspect it's because people who invest with every paycheck like to say (with pride):
"I do DCA!"
I lumpsum with every paycheck.

__________________

__________________
bpp is offline   Reply With Quote
Re: DCA or one fell swoop?
Old 08-24-2006, 08:09 AM   #43
Dryer sheet aficionado
 
Join Date: Oct 2003
Posts: 29
Re: DCA or one fell swoop?

For thirty years I DCA'd monthly ... with every paycheck.

It sounds more sanitary than "lumpsum".

P.S.
Because some claim that the fraction of returns that are positive decreases to 50% as the time period decreases, I've added that to the tutorial.
__________________
gummy is offline   Reply With Quote
Re: DCA or one fell swoop?
Old 08-24-2006, 09:58 AM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: DCA or one fell swoop?

1. DCA wins in a flat market as well as a declining market if the amount of investment is equal from period to period.

2. Some of the discussion above seems to be intertwining DCA with timing. Definitely not the same.

3. I think DCA, timing and lump sum investing all have their pros and cons and each has scenarios where they make sense. If you think one technique is best for all purposes all the time, you haven't thought it through.



__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is online now   Reply With Quote
Re: DCA or one fell swoop?
Old 08-24-2006, 10:09 AM   #45
Full time employment: Posting here.
bosco's Avatar
 
Join Date: Jul 2005
Posts: 987
Re: DCA or one fell swoop?

I like to use synchrovest when I have periodic money to invest. it's a little more trouble than DCA but beats it over time. Here's an explanation

http://www.geocities.com/lostcowboy5...ynchrovest.txt

It was developed by the same guy who invented AIM. I know Gummy is familiar with AIM because he has a discussion of it on his website.

__________________
I have an inferiority complex, but it's not a very good one.
bosco is offline   Reply With Quote
Re: DCA or one fell swoop?
Old 08-24-2006, 10:14 AM   #46
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Re: DCA or one fell swoop?

Well, the simpe answer of when to invest is: When you have the money to invest............

However, on the basis of this discussion, your core values come into play. Very conservative investors tend to DCA, more aggressive investors tend to lum sum.

Murphy's Law will come into play...........i.e..............there is an OUTSTANDING chance the market will go down the DAY after you invest lump sum...........

Long term.............TIME IN the market outperforms TIMING the market...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Re: DCA or one fell swoop?
Old 08-24-2006, 12:14 PM   #47
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: DCA or one fell swoop?

Quote:
Originally Posted by mathjak107
statistically it would be very hard if not close to impossible to invest on the worst days only..especially when the deck is stacked against you....there have been quite a few studies done to evaluate the effectivness of dca assuming of course you have a choice of lump summing it in or dca....looking at my own portfolio track record in the last 19 years my porfolio was up 15 out of the 19 years....the odds of getting a better deal and buying lower on dips putting a little in each time say would have actually had you buying in higher and higher.... of course like monday morning quarterbacking its easy to select a few time frames where dca would pan out better but statistically its very hard to catch those moments....like selling tech before the bubble burst ,collecting interest from bonds and jumping back into the markets before the rise again...looks great on paper but near impossible to pull off successfuly
DCA does reduce both the maximum gains and maximum losses achievable as compared to lump-sum. So lump-sum investing increases potential variations. Those variations are the definition of risk.

I am not advocating DCA over lump-sum and in fact have always chosen to invest lump-sum when the opportunity presented itself. But it is a risk-reward decision. If fear of a market drop the day after you invest drives you, then DCA. If you are more interested in the highest probability of maximum return and are willing to take the risk, then lump-sum.
__________________

__________________
sgeeeee is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
DCA withdrawals WM FIRE and Money 22 05-03-2008 10:09 AM
Lump sum to invest, DCA in or go lump? Olav23 FIRE and Money 4 03-03-2007 04:22 PM
Promising cancer treatment or hoax? The "other" DCA samclem Health and Early Retirement 1 02-12-2007 11:12 AM
DCA into Retirement? wabmester FIRE and Money 4 10-06-2004 10:55 PM

 

 
All times are GMT -6. The time now is 05:00 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.