TIPS instead of MMF

[John Galt]

You have just shown that the sooner you invest in a rising market, the more money you will have at the end.

Monthly DCA would mean investing a larger sum at the beginning of the month as opposed to that sum distributed throughout the rest of the month. Monthly DCA actually involves investing more in a rising market, since you're investing more sooner. Part of the reason that this DCA worked in favor of Daily DCA was because of the fact that there was a severe market drop between '03 and '10. If the price of VWO had been linearly increasing, then monthly DCA would have clearly outperformed daily DCA.

Or ... since ETF commissions would hurt you, what if you started with initial fund minimum purchase, then did your daily, weekly, monthly thing? Yahoo would have the adjusted price to include dividends paid by VEIEX.

I was using VWO prices as an approximation of VEIEX. Obviously making around 150 trades a year at $20 a trade at Vanguard (or even $8 per trade for Flagship members) would completely eliminate any advantage that daily DCA might have by costing you thousands of dollars per year.

Also, including dividends or the initial fund minimum would have changed the final values of each method, but would not have made a difference in the relative performance of the methods, which was the purpose of the experiment, so I excluded these things for the sake of simplicity.

 

[Koolau]

I came late to this party and I know this wasn't a "bash VG" thread, so I'll be brief. First let me say that I plan to move everything I can to VG eventually because I believe, structurally, they are the best. Having said that, they DO have humans working for them. They've screwed up my requests more than once and it has been a real hassle. For instance, years I have some extra cash, I fund my kids' Roth IRAs at VG. One year, I sent the money with instructions and, since I don't have access to my kids account info online, I didn't check on what they did with it. Instead of crediting to the previous year as I had requested, they credited it to the current year. In the great scheme of things it wasn't a disaster, but it was NOT what I wanted and it cost my kids some money over their lifetime, I'm assuming. So, in the words of that great American Ronald Reagan, "Trust, but verify!"