Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 3
<<If you have, say, $100,000 in stocks, how much protection are you really buying by investing an additional $1,000 a month for 12 months, as opposed to $12,000 now? If you assume the slower pace makes sense, shouldn't you pull out 11/12 of your existing investment, and put IT in slowly over the following 11 months?

Nope I don't think so.

You are making assumptions that you know what is going to happen. I use DCA when situations have a degree of ambiguity. In such saituations, diversifying your investments over time makes good sense, in my view.

Diversification is often a useful strategy to manage risk. I think that applies to spreading your purchases out over time, just as it can apply to buying into several diferent kinds of investments.

Seattle Pioneer
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.