Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
Want to play it safe? DCA it, willing to take a little extra risk, go all in.

The big conceptual problem I have with DCA as an investing strategy (as opposed to a discipline to force oneself to actually put income into investments), is - what's so special about the money that's already in there, or about the money you do NOT plan to put into the market this month, or about now as opposed to later?

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?

For that matter, consider the $1,000 you plan to invest this month. Shouldn't you average it in over the next 12 months, just like the $11,000 you are holding out?

And there's nothing special about NOW, either. Shouldn't you start over again next month?

Reductio ad absurdum, because there's no apparent reason to stop anywhere shy of absurdum, the DCA investor should never invest a single dollar in whatever he's averaging into.
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.