Dollar-Cost Averaging Frequency: Daily, Weekly or Monthly?

Dollar-Cost Averaging Frequency: Daily, Weekly or Monthly?

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[tragdar]

This was a terrible answer for the question actually being asked, it never got to the two main points- What is the optimal amount of time between deposits, and does this change considering we're deep into a bear market?

They treated it like the question was "how long should I dollar cost average a single sum", which is almost entirely unrelated to the actual question.

[matthewbutson]

What I thought the questioner meant was that if you had $300 to invest per month, are you better off doing a one payment of $300, weekly payments of $75 or investing $10 a day?

[JamesWilliam]

Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.

[benjaminjohnson]

For the past 20 years, through good times and bad, I have been dollar cost averaging every other week, when I get paid. No complaints.

[jackbergeron]

An action is earning money. Money management is a behavior. Increasing wealth is learning. This is the Principle.

[NickVetter]

I usually buy every Monday and then will buy again if it goes down during the week

[BillyBob-rrse]

Whenever you get paid should be the day you DCA. Allocate those funds accordingly based off your budget, invest the money, and forget it

[CaptainBenjamins]

Every time I get paid, I put 15% of it into my index funds. That is the frequency.

[monodactyl]

If you invested it all lump sum in the first month, the worst 1-percentile year would be a -35.9% year. If you were to DCA monthly with 12 equal chunks, the worst 1-percentile year would be softened to -24.6%. Is a -24.6% year significantly less painful than a -35.9% such that you'd give up the median return of 8.6% with lumpsum and go down to 5.0% with DCA?

Lump sum is usually the outperforming choice, but emotionally, DCA can be justified. That being said, I think some of the blow-softening you get isn't particularly worth it.

It also goes the other way with the best 99 percentile outcomes for a year having lump sum returning 53.4%, and a year-long DCA returning at best 27.3%

I posted this with more detail the boglehead subreddit regarding the investing 100% in the first month vs 12 equal chunks over a year.

[osmondhagby]

Since lump sum investing (time in the market) is better in the long run than DCA, wouldn't it make sense to dump in everything you have to spare at all times. Whether it happens to be 10k or 10 dollars, just invest it when you don't need it for anything else.

[Hostyl]

"What's the Frequency, Kenneth?"
Anyway, at this point, I'm weekly. The TSP is one set of weeks, and after tax on the opposite set. Not really planned that way, but it's just how the accounts work out with their automatic investment plans.

[RichieBenno]

I think more often (daily vs monthly) the less variance you would have with buying high or low over the long term?

[TheDannyHamilton]

Why did it sound like Brian and gg we're using completely different definitions for what DCA even is?

Brian seems to just be talking about normal continuous regular investing over a lifetime (401k, 403b, etc)

Bo seems to be taking about spreading out a method of moving a suddenly available lump sum of cash into the market over time to reduce the emotional response.

Bo's description is my understanding of the definition of the phrase "dollar cost averaging". If you're buying into the market regularly, and aren't trying to spread out a lump sum over a short period, then you aren't DCA, you're just investing.

[superproducercbiz]

i usually set my dca amount weekly to the minimum amount but when i see something is at a good price i increase it. i tweak it week by week

[chriscarvalho]

I use M1 finance so I buy twice a day, once in the morning and once in the afternoon.

[BrettsCorner]

Dollar cost averaging may be better over the long-term, but if you only have a year or so to invest, it might be better to go up front, especially in a up market.

[Frank]

Makes sense, but people become afraid when the drops hit. Drops can accompany layoffs like 2008. Also, some have work reductions, .layoffs ect. to deal with for the average person. There is no smooth income curve for most, sadly.

[Anoon]

What about daily? Giving the volatility wouldn’t buying daily leave you possibly getting more shares if you can do so consistently for years, even if it’s $10 a day instead of buying that cup of coffee buy stocks.

[joshcanady]

As a Ga resident, I know exactly what 96 Rock is.

[jz]

There's no need to complicate things further than contributing when you get paid