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Since the market on average goes up over time, you're always better off investing as soon as possible. Only if you don't yet _have_ the money you want to invest, but plan to accumulate it over time, does DCAing make sense.



Another way to think of DCA vs. "All in" is DCA will on average result in lower gains but also lower losses. On the other hand "All in" is like gambling in Vegas with one very important difference. You are the house. In Vegas, the odds are with the house, and you are likely to lose. In going "All in" to the market, you are the house, and you are likely to win, but sometimes you won't. Just like sometimes you make money in Vegas, sometimes you will lose money going "All in" to the market. Putting all your money in at once vs. DCAing it is a gamble where the odds are in your favor. Want to play it safe? DCA it, willing to take a little extra risk, go all in.

I actually DCA my Roth investments into my taxable account though out the previous year, then on Jan 2nd, I tranfer the amount into the Roth and purchase different "items" based on my pre-selected asset allocation. (Cash / BKT / DIA / DVY / EFA / EWJ / XBI / ICF / IJR / QQQQ / SPY) What I sell from my taxable to make that happen varies, but I use it as a rebalance act. Its complex because I try to hold certain things in my Roth and other items in the taxable, (bonds vs. stocks vs. cash vs. Dividend payers)... So I don't DCA my Roth at all, the only reason I DCA my taxable is because I don't actually have the money until I have the money :)

When I sold my house and had 50K of proceeds available I immediatly spread the money into the asset allocation and went to bed. :)

Having a preselected asset allocation model you are trying to match makes investing a "simple" thing. I use to do the individual stocks, and would spend 20+ hours a week researching and tracking. The first 7 years or so, I enjoyed it, it was fun and exciting. I was beating the market, it was a thrill.... Then I got bored, and started spending almost no time reseaching and tracking.. and instead I spent my time worrying and not sleeping so well. :)

These days I just plug my spreadsheet, it tells me buy this, sell that. When the numbers reach a certain size (2% or 5K above or below the expected allocation amount, I rebalance... or when I'm moving money to the Roth accounts). Otherwise I just just make comments like "Last month I lost a Lexus , this month so far I've gained a Hummer". It makes investing fun again because I don't actually spent any time on it.

Laters,
-d.
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