Dollar Cost Averaging Is A BAD Investing Strategy. Do THIS Instead

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2 жыл бұрын

Dollar Cost Averaging is a very popular investing strategy, but a lot of people get it very wrong.
Unfortunately in the case of intentional Dollar Cost Averaging, the investor will on average lose money compared to investing in one go.
And in this video I explain exactly why DCA is not a great investing strategy.
But there IS a good version of Dollar Cost Averaging - the problem is that it is the unintentional version.
And not only is that way of investing good, but it also gives you a way of improving your investing strategy further by being smart with the stocks you choose - I share a specific tip on how this way of Dollar Cost Averaging can work.
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Пікірлер: 488

@jstar1000 2 жыл бұрын

I've always thought of DCA for putting in what you can afford each month to win over time more so then taking a large sum of money and spreading that out over time. Two different things in my mind. Go all in with all the cash you want to invest now then DCA each month going forward.

@soap5547 2 жыл бұрын

It's just a savings account, literally; and not a strategy.

@jflhr 2 жыл бұрын

I put halve of my normal investments amount every 15 days and if the market goes down I double the amount. If the market crash very bad I have a savings ready to go into the market to do massive buys.

@zebratroopfan6695 2 жыл бұрын

I DCA through payroll deductions every two weeks. I’ve been doing it for years. Very happy. When I have a large sum I usually invest all of it immediately. Again I’m happy with we’re I’ve ended up

@ClosestNearUtopia 2 жыл бұрын

Or put in your initial investment in a tactical time, which could be now, compared to the 60k top. Dont invest blindly and then dca, wait for the market, then start your plans, in this case, the difference would you almost made 2btc already.

@grandy 2 жыл бұрын

thank you! same thing I was saying

@rustygear447 2 жыл бұрын

Completely disagree. Some of your logic is incorrect. You said DCA would lose you money because the market tend to go up. That's just mathematically wrong. You don't lose any money, you just gain less than if you put all the money in at the start. The point of DCA is to reduce risk, but at the cost of reducing gain as well. It's good for volatile stocks where price fluctuate 15 to 30% a week like Tesla for example. If you dump all your money at the peak of TSLA stock, you might see a loss for months. DCA would guarantee you make steady gain.

@CathyZhang 2 жыл бұрын

Completely agree with you.

@AXELRAPUNZEL 2 жыл бұрын

I agree with you. Sasha knows a lot, but sounds like someone who has no personal experience with multiple markets

@BilalHussain-yd6ck 2 жыл бұрын

Agreed.

@Alumnikiid 2 жыл бұрын

This aged well. Good thing I didnt lump some now DCAing but more than usual after all these📉. Even VTI and SPY close to their 52 week low.

@UTKZ1 2 жыл бұрын

@@AXELRAPUNZEL Could you be more specific about multiple markets statement?

@ColorOfSoundSalad 2 жыл бұрын

Poor description of what dollar cost averaging is trying to achieve on several levels: a) DCA is supposed to reduce the risk of losing money. It is natural to expect a reduction in P/L if you take lower risk (no free lunch after all). All discussions that do not consider risk are unfortunately flawed. Please provide a reference that shows DCA underperforms on a risk adjusted basis. b) DCA can be applied over vastly different intervals and for different purposes. If you want to average in the market over several years, it is obvious that the market is expected to move up and one could miss on higher profits due to lower exposure. But if you want to average over a day-week (i.e., guarantee that you buy close to VWAP) then market direction is essentially random. If you want to reduce exposure to significant market risks (e.g., FED tapering, interest rate changes, covid, etc.) you can DCA over several months. If a company has an unproven business model, spreading purchases over multiple quarters is a viable strategy to increase exposure gradually as the company proves itself and becomes less risky. DCA generally is a very useful tool to deal with various kinds uncertainty.

@runem5429 2 жыл бұрын

I don't think you're thinking about DCA right, it's not primarily about the mathematical effectiveness of it , although maximal time of dollar invested is a good way to get close to optimal, it's about avoiding psychological threats to the investment. It's like how you can better lose weight and get in shape if you have a set routine and stick to it. Or how a bunch of principles outline the scientific method to produce better science with less interference from personal bias. The ideal trader and investor would be the guy who always get it right, dunno if he exists but certainly lots of people seem to get it wrong almost every time and THOSE people will always benefit from a strict plan almost whatever it is, and DCA is one of the most straight forward ones to get a routine going and to ease people out of obsessing about price movements. I have a friend who bought Tesla at something like 550 and then it went to 900 and back down to 650 and he panic-sold and was rather happy to get out having made a profit, same guy also owned a series of overly conservative and stagnant companies for 10 years before that making almost no return on them. He would benefit immensely from DCAing, if it would let him get into more volatile investments and stay in them during dips. If you are a nervous overthinker or a non-thinker, DCA will help protect you from yourself and your dumb descisions.

@DeusExAstra 2 жыл бұрын

I dont think the purpose of DCA is to reduce the risk of losing money, but rather to reduce volatility... which I guess is good because some people cant handle volatility and might sell at the wrong time. Also, to some people, DCA is a psychological benefit. But there's been research that shows that just investing whatever money you have is better in the long run than DCA (as mentioned in the video). And, if you assume that the market goes up in the long term, then this makes sense and should not be too difficult to understand.

@frankwiersma7980 2 жыл бұрын

Fully agree. DCA is a way to reduce risk and of course that will cost you something. Saying that DCA is a bad investment strategy is completely a complete misunderstanding of the objective of DCA. The stock market fluctuates a lot and DCA has been proven to be a very effective way of risk reduction for low costs. DCA is basically buying the dip, and there are a lot of dips.

@CathyZhang 2 жыл бұрын

@@DeusExAstra I agree with you. People need to understand that when we talk about risk in the context of investment, it really means volatility; it does NOT mean the risk of losing money.

@simoneorecchioni7352 15 күн бұрын

@@frankwiersma7980 DCA does not reduce the risk because sooner or later it becomes a Pic anyway. Your cash income will no longer be able to average the price and you will only have wasted time and money

@100uo 2 жыл бұрын

One of the few financial youtubers speaking the truth instead of repeating what's fashionable.

@SashaYanshin 2 жыл бұрын

Thank you!

@Ro-xo3sy 2 жыл бұрын

Vanguard did a study in 2014 i think where they found that in MOST instances, lump sum investing wins out in the long run, but not by a huge amount...obviously this only applies to index/etf investors though. The issue with individual stocks is that you have to consistently be right in your picks over a very long time, which shifts the odds out of your favour, compared to following the overall market which on average goes up. Obviously there are always the arguments of "if you invested on this day right before this huge crash if would take 10+ years to get back to your initial investment amount" however- this always assumes that you then never invest again after that initial lump sum...

@JeffLuntGames Жыл бұрын

Yeah, I think the summary towards the end of the video, that Sasha calls "DCA on steroids", is essentially the same as investing in index funds. What I mean is that you can do a bunch of hard work and research into which companies should be best-performing or have what you think may be the best chances of being on sale right now, but investing in an index that follows, for example, the S&P500 basically does this already, because companies are moved in and out of that index over time automatically rather than having to do all that research yourself. Of course, all the normal caveats apply, such as, "Sure, but if I do my own research /and I happen to be right/ (a.k.a. lucky), then I'll do better by doing my own research. But ... it's nearly impossible to do the level of high-quality picking over the long-haul, which is why actively managed funds have been shown not to do better. It would be a safe conclusion, I think, that the professionals who pick stocks will do better than me picking stocks on average ... if that was a strategy that worked for long-term retirement savings ... but why do all the work when investing in the index is basically putting your trust into the market itself rather than a much more narrow subset of the market such as picking individual stocks?

@gengarphantom6967 Жыл бұрын

only if you are lucky and happened to bought the shares at good times without actually knowing you are doing it. this is why DCA is better on the long run to avoid the risk of volatility.

@alanpedrick1562 9 күн бұрын

@Ro-xo3sy ir that you have a crystal ball and know when the bottom will be reached and when the crash will happen in the first place. DCA makes great assumptions that you can make consistent actions that predict what the market or stock will do. This has never been done successfully because it is fundamentally impossible. One thinks because they were lucky a couple times in a row that they will continue to be in the future. Also even if you are lucky a few times on timing, this doesn't necessarily mean the math will be superior to early lump sum. Take the opinion out and look at the data and statistics and you will see DCA is not a useful method for 99% of investors.

@arigutman 2 жыл бұрын

The dollar cost averaging strategy is a great problem to have in my opinion. Fact is timing the market is impossible so it is better to have time in the market than time it! And what is more, you’ll never lose the pick up on discounted stocks when there is heavy market volatility, 🙌🏻 🚀 💵

@ladyala7597 2 жыл бұрын

Well DCA works for me- I invest the same amount daily in 2 ETFs (bull and bear market) and it works wonders for me.

@simoneorecchioni7352 Ай бұрын

You will be able to do this for a short period of time, then when the sum will be high, your daily cash will be useless to average the price and at that point it will in effect be a lump sum

@oneinchpunched3661 Жыл бұрын

Thanks for making this video. Very needed. This is how I have invested for some time. A mix of DCA and Opportunism among your favoured stocks :) I have always wondered about the DCA and not really come to grips with it. It always felt non logical most of the time. Nice to know that a savvy investor like you use the same "method" as I do, which to me is not really a method, but common sense. Again, much needed video.

@Petch1 2 жыл бұрын

I watched this to see if your explanation made sense and it does. I was glad to see that I had done it the best way without ever really thinking much about it, and it really has been very successful.

@andrewstorey7813 2 жыл бұрын

Do you have a video on how YOU analyze YOUR stocks and shares? I’ve watched a fair few other people’s but I’m a fan of the way you explain things and your point of view in general. Many thanks

@SashaYanshin 2 жыл бұрын

Quite a few videos on specific stocks and will of course be doing more too. 👍

@mauroclerici5083 Жыл бұрын

DCA is a concept that you can use in your investing stategy and eventually twist according to your needs in terms of timing amounts per time based on current asset value or decline percentage etc... but the point here is that it might not fit everyone as it requires years of patience as well as doing a thorough due diligence at the beginning and a review overtime. So patience and study time are mandatory, just like for any other investment strategy

@chillinwithscripture3033 2 жыл бұрын

Hej Sasha. Very informative video. Im new to investing, just 3 months ago I bought my first stocks. If one has a monthly savings account in etfs and so forth, is it not dollar cost averaging in that case? Because you are putting in money every month and that money is invested in a series of etfs that you choose. Anyway, would love your input. Thank you very much

@anrtheace 2 жыл бұрын

Smart! One of the most important rules of investing is to understand the psychology of investing

@BT-oq6un 8 ай бұрын

You’re confusing recurring buy with DCA swing entry/exit

@Pieter2360 2 жыл бұрын

Excellent video. Dabbled with DCA and value averaging for many years. Bad, bad idea & lots of regrets. Abandoned this approach as indeed 2 out of 3 times, lump sums trumps DCA.

@tom7676 2 жыл бұрын

I DCA because I get paid monthly not annually.

@SashaYanshin 2 жыл бұрын

I talk about that in the second half of the video 👍

@tom7676 2 жыл бұрын

So you did, sorry. Rewatched the video. I think DCAing every month on payday into a global ETF is a very different thing to building a position in a company that you feel is undervalued though. There's kind or a line where it can become buying the dip...which is also a good idea but something different. Just say here thinking of how I do things

@thomasmatthews80 11 ай бұрын

I think the critics of this video are missing the main point he makes which is sound. Accepting that he means earn less rather than lose, his logic is right.

@awais127 2 жыл бұрын

Doesn’t matter about maths - it depends on attitude to risk and most people will sacrifice a little bit of return to reduce risk. DCA is not a bad strategy.

@adiadindas 2 жыл бұрын

A lot of people get it very wrong because they blindly apply that strategy. Dollar Cost Averaging is a very good strategy if you are investing in index fund, diversified ETFs. Also for people who do not have time to read the financial news, they do not know how to read the chart. But if you are investing in individual stock and If you know the knife is falling why would you try to catch it rather than wait for a while until they settle on the floor, bottom.

@Cizzy-rq8un 2 жыл бұрын

That was a Nice take on DCA. I watched couple of your videos and I am subscribing. Thanks

@SashaYanshin 2 жыл бұрын

Thank you!

@mufaddalkathawala7128 Жыл бұрын

Really good idea. However, the idea would require alot of researching into individual stocks which would get really time-consuming. Do you have any good ideas for using dollar-cost avaeraging technique while purchasing ETF's which provides you wide diversification without much researching into individual stocks?

@Jon77777 2 жыл бұрын

Brilliant video - this is how I cost average my way into the market as I have around 14 stocks I like as well as a couple of ETFs. Thank you 😊

@SashaYanshin 2 жыл бұрын

👍

@kevinaguillon6838 2 жыл бұрын

Tell that to those who recently bought Nasdaq in ATH all in one shot recently just because “mathematically” market goes up. DCA is not meant to maximize your gains, but to minimize risk. DCA works well when market is overvalued, and yes, in the long term market will go up, but you never want to buy all in one shot in a overvalued market.

@pb8582 Жыл бұрын

Right now you are a lot better to dca when all time high ETF and sp500 close to all time high. When the sp500 is lower definitely dum sum. But you have to be a fool to think the market always goes up... I'm 35 years old and I have already seen 4 massive crises that wipe out more life than that guy has ever seen. Dca is protection

@samk2851 2 жыл бұрын

Thank you Sasha. Your video the BEST clear explanation of DCA I have ever listened to. I never really understood this well until today when I listened to your video. I have been doing the latter type of DCA (bad type of DCA) and not really timing the market well, but even more than that has been very stressful as I am not a veteran invester. Thank you so much for bringing that "I get it!" moment to me!

@sennabus3356 2 жыл бұрын

I think we are not taking risk into account. By going all in with a lump sum, you’re very exposed to volatility or a crash. All depends on how soon you’ll need access to the money.

@Word187 2 жыл бұрын

Very insightful, thanks!

@SashaYanshin 2 жыл бұрын

👍

@valentindanielbara548 2 жыл бұрын

From my pov your strategy depends on how intrested and how much time do you have for investing, if you do this full time, probably there are better strategies than instantly putting money in as you get your paycheck, if you don't want to allocate a. lot of time ..yes this is a solution

@EchadLevShtim 2 жыл бұрын

If you manage buying at or near the 52 week low, you can choose to drop 1000 on that stock confidently, but I personally drop 100 first and watch it for a week or so before I bump it. Usually a dip happens when the market opens, sometimes around lunch. Other lists im waiting for the stock to drop 20-50%, because if the shares are low that 1000 bucks will buy more shares. So thats always a good time to Go Big.

@neilcook1652 2 жыл бұрын

Very useful thank you Sasha

@SashaYanshin 2 жыл бұрын

👍

@namaste597 Жыл бұрын

This video is one I've been looking for some time. It's what I've been thinking except with trading (percentage values) . If you only trade on percentage values you can never lose. Basically it's a keep it simple method. Everytime you buy clock that buy (price) then when that percentage changes you buy accordingly.

@SpamBeasley 2 жыл бұрын

I wish I'd watched this a couple of months ago... 😢 Thanks for all your output so far Sasha. Genuinely informative, honest and thoughtful content. Unusual for KZfaq.

@southstar9931 2 жыл бұрын

The odds of this comment is 50/50

@cliffordphillips305 2 жыл бұрын

Hi, what I find more than not is when the market is high, websites including youtube encourage you to invest the lump sum, but when the market is near or at the bottom of a bear market you get a lot of websites and KZfaqrs encouraging you to do DCA. how strange? A better way to think about this is using a financial calculator or spreadsheet and comparing the two methods. one should also think about bear markets and how long the average length is, and how big they are on average. one should have a plan in place for taking advantage of one, if when they happen.

@abid0088 2 жыл бұрын

Thanks for sharing 👍 and subscribed.

@blueepinkk Жыл бұрын

Completely disagree with your opinion. People that choose to DCA decides to reduce their risk for their capital and not to optimize the investment. People that choose to DCA is having the view that market will go up in average. Or else they won’t invest at all. People that choose to DCA because they do not want to subject to behavioral bias and avoid wrong call when affect them. DCA is not to optimized return even the view is market is going up more than down on average. They mainly do it to overcome their their behavioral bias and true to “low risk low return”, people that DCA do not expect to make higher return than those with lump sum investment. That’s not their goal. Their goal is able to sleep well at night, stay optimistic it will eventually work out and it’s okay to make a bit less!

@simoneorecchioni7352 Ай бұрын

The problem is that dca simply shifts the exact same risk further forward in time and don't reduce the risk

@davidwelburn 11 ай бұрын

Do you have a list of stocks that you invest in, or that are on your watch list? Thanks.

@evilqueen1 2 жыл бұрын

This is the best explanation I’ve come across of how DCA works and in my view if you have done some homework on your stocks, is more often than not a bad idea. As you say, the other sort (which I don’t even think should be called DCA) is a excellent way to maximise returns in a similar fashion to the benefits of compound interest….. in the days when interest was worthwhile! I think of that sort of regular investing as continuous investing of surplus income in order to make my money work for me as hard as possible. Thank you.

@Bluebird22200 2 жыл бұрын

Thanks for this. I received a large sum of money a few weeks ago but the market has been green green green all day everyday. I've always been told never to invest on green days however it just isn't stopping. I'm gonna just put it all in because 8f I had just done it when I received, I would have made a lot of money.

@irvindelagarza4302 2 жыл бұрын

What’s you P/L now?

@TiagoRamosVideos Жыл бұрын

Great video 👌

@ureviews 2 жыл бұрын

I'll give you another example, I max out both my IRA and Roth IRA accounts as quickly as possible at the start of a new year. Even if it means I have 0 salary for a few months. I do this by saving before the year end enough to last me those 0 income months (and to max out roth ira on day 1). I think it made a big difference.

@themachine300 2 жыл бұрын

The maximum contribution limit to all IRAs per person a year is 6000( unless over 50). You can’t contribute 6000 to both an IRA and a Roth IRA within the same year. You could do 3000 in one and 3000 in the other if you wanted to do that for some reason but not 12k total. I would double check your contributions.

@jdavids1332 2 жыл бұрын

that last piece of advice was so simple but so wise

@randallgonzalez8121 2 жыл бұрын

Based on your theory, I have accumulated a large amount of money because I didn't know how investing works. With that large amount of money , would you just put it right away into the market? And then progressively add any new money into the market?

@osmondhagby4788 Жыл бұрын

Put everything you can spare into the market straight away. And repeat.

@SovereignMoney 2 жыл бұрын

I would dollar cost average when having a pile of cash if i'm "catching a falling knife".

@samk2851 2 жыл бұрын

Sasha, what would you advise if you get a very large lump sum of money. Would you still put that all into the stock market, following the principle of DCA? or keep some liquid, i guess incase there is a crash in the market.??? If and when things drop, if you don't have any money to invest, it unfortunate to lose that opportunity to further invest. Your advise?

@anonnymous4684 2 жыл бұрын

Don't know what you did with your large lump sum but I would never go all in for the reason that you state - you miss the opportunity of buying more for less when the market falls. Anyone who'd put all their cash into an SP500 ETF at the end of December '21 would be sitting on a loss now as it's not returned to its all time high for the whole of the year (to date).

@affegorilla1299 2 жыл бұрын

Hey Sasha, your take on the AMC situation would be great. THX

@ashepe 2 жыл бұрын

By dollar cost averaging you're reducing the risk of "buying on the top"; this comes at the price of missing out on gains on average. If you're averse of risk and have relatively short timeframe it might make sense to do it?

@SashaYanshin 2 жыл бұрын

If you are averse to risk and have a short time frame, I would posit that you should not be putting that money in the stock market.

@ashepe 2 жыл бұрын

@@SashaYanshin I agree in the very short-term. I should elaborate on my definition of short-term; around 5-10 years. In this timeframe it might make sense?

@SashaYanshin 2 жыл бұрын

@@ashepe Still carries risk - e.g. if you want to buy a house with that money and you then hit a market crash, you won't like it. On average, DCA'ing a lump sum over a long-period of time into the market will lose you money. That's the simple fact. But sure - it reduces the risk of volatility.

@ashepe 2 жыл бұрын

@@SashaYanshin I totally agree that it's the wrong decision on average mathematically. I only compare it to putting all your chips in the middle on the poker table with Aces; mathematically it's the decision, but you'd might not bring all of your savings to that table on that one occasion. Might be a wrong analogy 😛

@JimmyHendrixJR 2 жыл бұрын

Great video!

@SashaYanshin 2 жыл бұрын

Thank you!

@Frank020 Жыл бұрын

What happens is that people don't have a lot of money lying around, so with each check they buy a share. This can work. I would not DCA into high risk stuff, but if it works those guys become wealthy. But, some lose a lot too.

@lildvl10 2 жыл бұрын

Question to you guys, whats the difference between selling it now and buying when its lower.. vs dca? For Example, lets say i bought X at 50 and im thinking of selling it at a loss. Curent price of X is 40.. now whats the difference besides losing $10 if i sell my sol at $40 and buying at a lower price (lets assume that the current price is $30). Wouldnt it be better to do that i instead of DCAing since there is less risk on losing more? Im not sure if this makes sense and if the math is right, that is why im asking and maybe people can answer this question. Would love to know the opinion of you guys in here and if you happen to read this then may he can give an opinion on this? (Not advice, just opinion on my current thinking) In summary: What’s the difference if i sell now at a loss and buy at a lower price vs DCA? wouldnt it be a less risk if i sell at a loss and buy back at a much lower price to get back those loss instead of dcaing when i know that the price will keep going down anyway?

@crazycool1128 20 күн бұрын

People started thinking this way because rates were like nearly 0

@gusgalvanini Жыл бұрын

Unless you're investing in the Venezuelan stock market, or Argentine stock market, or the Mozambique stock market, this is all w/ the assumption you're investing in Anglo-saxon, english speaking, European majority countries.

@centralintelligenceagency9082 2 жыл бұрын

Dollar cost averaging when the trend is down like our bear market, and lump sum averaging when the market is in an uptrend

@GabrielStoicea 2 жыл бұрын

4:31 hope no one invested a lump sum when this video was published. now we know it was the peak of a bubble :)))

@pdn9609 2 жыл бұрын

The market is not designed to always go up. The US stock market has done so but there are many other markets that has not. A good question would be why has the US stock market behaved like that and will it continue to do so in the future. Then you propose a plan that you call dollar average but it is not. Maybe you are confused. Picking a subset of stocks from a larger basket that trade lower is not dollar cost average. It rather looks like timing the market, but again it is not that either.

@holliday. 2 жыл бұрын

It's basd on the cost of money.,.. if they're just debasing currency then we'll see results from that as well.

11 ай бұрын

Completely agree with you: this special DCA is also what some grest investors do, however its double difficult from the stamima and company analysis point ov view. Many thanks!

@SR1Records Жыл бұрын

I'm new to this so forgive me if this is a dumb question. I understand the concept behind DCA when it comes to buying, but what about selling? You're technically making money if your buys go up in price over time, but that's not liquid cash that you can buy things with. It's assets. So is DCA just to build assets and just to buy? The concept doesn't apply to selling, does it? If you're just buying and buying and buying every month, at what point do you decide is the time to sell your assets for liquid cash that you can use to buy a car, for example? Again, I'm very new to investing but all the advice I've been hearing is about buying. And i see people on KZfaq who have like 100k in their investment portfolio, for example, but it's tied up there. If they sold it all and brought a supercar, they'd have 0 funds in their portfolio. They are basically asset rich but cash poor. They've got 100k of assets but driving a 10 year old car.

@Whaddle31 6 ай бұрын

Great question leaving this comment so I can read an answer

@stupossibleify 2 жыл бұрын

Monsieur, with all these investment opinion vlogs you are really spoiling us.

@SashaYanshin 2 жыл бұрын

Remember it's just my rants and random opinions from a guy on KZfaq. No advice here 🙃

@stupossibleify 2 жыл бұрын

@@SashaYanshin I changed to "opinion" :)

@dingerness Жыл бұрын

I disagree for the following reason: The purpose of long term investing is to maximize your investments over the long term. While it is true that Vanguard did a study that shows a SLIGHT advantage to lump sum investing, that is a theoretical and mathematical analysis only. For better or worse, humans are EMOTIONAL beings. For many people, the emotional toll of investing a large lump sum and then quickly losing 10, 20 or 30% of it, would cause a reflexive pullback in how they invest in the future. Simply put, if your strategy works mathematically, but not when you apply human emotions, then choose the strategy with slightly less mathematical return in exchange for a higher REAL return. And then sleep well at night.

@stephenkowalski2448 2 жыл бұрын

Good point. If you are just investing in the market then DCA is the best. If you have a batch of stocks buying individual stocks you follow for years and know what you are doing you can rotate between all the stocks and get better returns.

@napsam71 Жыл бұрын

So is now the time to buy vs when this video was released??

@steveno7058 10 ай бұрын

Agree. Timing the market is impossible. Timing individual stocks is possible

@brickhunter9537 2 жыл бұрын

Some great advice.

@grynocologist 2 жыл бұрын

Correct.dca means buying at a higher prices than lower prices because the market goes up most of the time..

@SashaYanshin 2 жыл бұрын

It’s simple but I felt people need to understand it better - get surprised at the number of questions.

@brettclark3885 2 жыл бұрын

As a statistician, Sasha is spot on with this video. The market generally increases; 100 years have proven this. Two basic cases; 1. If the market increases as per normal, DCA will net you less than investing the total at time 0. (If you are happy to wear this and lower the risk then go for it, BUT, you are implicity betting the market will go lower. So it's contrarian) . 2. The market declines over each future buying interval. This has you "averaging down"..one of the worst mistakes you can make. It's where the statement "paying good money after bad" originated. What I will add here is the best things to do is 1. Pyramid (averaging up) for profits and 2. Use stop losses. Over 15 years in the market through multiple crashes has performed brilliantly.

@anonim091 2 жыл бұрын

i don't agree, because DCA benefits only if the market grows overtime. DCA has no advantage of buying the dip, it's simply trying to take advantage of the market fluctuation whether it goes up or down. and trying to sell some time later when the market crazily going up that usually caused by hype..

@Olastyles 2 жыл бұрын

Absolutely! With regards to DCA I would also like to mention it may sometimes worth opening a new position in different account rather DCA example you have 200 shares at £15and it goes down to 9. You can only spend 300. Such a little amount in comparison to your initial position will not DCA effectively. It worth opening a new position in different account with super cheap cost bases. It had worked out for me well.

@umairbax1621 2 жыл бұрын

Yes it makes it look better on paper but as I'm sure you're aware, it makes no financial difference.

@georgewright9914 2 жыл бұрын

Dollar cost averaging mitigates the majority of volatility & uncertainty in the long term. During a recession or period of economic downturn dollar cost averaging is more competent than lump sum investing

@Alumnikiid 2 жыл бұрын

Like now. Starting to DCA during this 📉

@timg9019 2 жыл бұрын

Brilliant. V helpful

@kevincowan2639 2 жыл бұрын

Sasha what type of stocks, funds or ETF’s are you invested in?

@Whaddle31 6 ай бұрын

Vti schd voo dgro

@earthling808 Ай бұрын

I dont completely agree either. Some stocks may go down for a couple of years. Chances are overwhelming that you will not time the bottom. You will have to wait longer to break even if it ever comes back up.

@sjk7619 2 жыл бұрын

What happens on ‘average’ in the market does not matter for the individual investor. The individual investor only gets to experience one version of what happens in the market. They dont get to experience all the things that happen in the market and get an average outcome of those events. You either win or you lose. Simple as that. DCA works especially well in volatile market such as crypto and especially more so during a bearish market where you dollar cost average down because the upside is much greater.

@MICEVVV 2 жыл бұрын

In my humble opinion, I think in DCA there is no white or black , the best version is the grey version when you mix lump sum with dollar cost averaging. Let me explain: you can lump sum every determined consistent period of investing, that way you dollar cost average but you don't spread your money you just throw in what you have right now, as Sasha said. So the two terms are intertwined together and are easy to mix for what they really mean. Just put every period what you have and watch Netflix. Great video.

@luxurylife7464 9 ай бұрын

You’re not a financial advisor 💯 but Warren buffet says that for the average investor, buying low costs etfs over a long period of time (DCA) will do very well with time. I think I’ll listen to the master of investing. If he thinks DCA is good, that’s the right answer.

@magneeegholm349 2 жыл бұрын

Just subbed!

@SashaYanshin 2 жыл бұрын

Thank you!

@ATIKURRH Жыл бұрын

Hello Sir! How are you? I don't understand how to explain the matter 1st/ Let's say the price of a share was 20$. I bought 5 shares for 20$ 2nd/ The share price fell to $15. At 15$ I bought 6.66 shares 3rd/ Then after falling again to 10$ I bought 10 shares at 10$ 4th/ Then it came down to 7$ from here too. At 7$ I bought 14.28 shares again 5th/ From here the last came down to 5$ after that I bought 25 shares for 5$ The question is, the last price has dropped to $5 from the first price I bought, now the question is how to dca between the first and last price, so that the dca price is close to the last price. Please tell me I will be very helpful! Similarly from opposite side, how to DCA between last and first price so that first price is close Now the question is that the price I bought at fast has gone down to last price now tell me a process to do BCA between fast and last so that it is close to last price t plz Just as it has gone from above to the last price, if you do DCA between the last pass and the above price, it should be close to the last price that has gone up.

@CAnthonyVidal Жыл бұрын

“The market will grow” I agree, is it mainly because the purchasing power of our dollar goes down? For example Kyle Bass once said “Zimbabwe’s stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs.” How do we protect against only the nominal price going up? What we really want is an increased purchasing power in a portfolio, correct?

@urthface 2 жыл бұрын

Really helpful video. I’m only just about to start my investing journey and you hit the nail on the head with how fear of missing out wrestles with fear of getting it wrong. As I’m early on in the learning curve I’ve been watching a lot of content and I have to say this is my favourite channel so far. Really comprehensive and balanced discussions, and the rants against immoral hype boys has reaffirmed my opinion. Great work and I’ll be back for every video of not-financial-advice 👍🏻

@dimikaydoesthings 11 ай бұрын

Highly advise reading some of the comments on these videos to get an alternative perspective/explanation/elaboration. Not all his points here are accurate

@kevincowan2639 2 жыл бұрын

Ok you give an if investing in May 2020 post crash but if you put your lump sum in on February 2020 before any crash

@sd5458 Жыл бұрын

The issue I'm running into with DCA is the differences in stock prices and investing the same amount each interval. Not all prices are the same so what then, "save" up your bank transfers until you can buy the desired stock? Doesn't that kind of defeat the idea of DCA if you're waiting for certain conditions?

@unfilteredminds-zd4ig Жыл бұрын

in simple DCA, you don't invest the same amount of stock, you invest the same amount of money.

@highsol222 2 жыл бұрын

The tried and true strategy that has worked best for me is to invest in good companies that are proven. Think something like CROX, NOT JMIA. The former aka the proven winner type companies are the only ones you should be DCAing into. Think Starbucks (yeah thats probably a better example of what to DCA into) Newer or non-proven companies should be regarded as speculative bets that you only put money into a few times. I learned that the hard way buying the dip on VUZI left and right.

@JasonBay-RealEstateInvesting 2 жыл бұрын

You’ve completely missed an important element of dollar cost averaging and that is that the same amount must be invested every single time on a consistent basis. That way when the market is high you buy less and when the market is low you buy more. It’s not just about spreading your money out. This second part is very important

@SashaYanshin 2 жыл бұрын

I literally talk about this in the second half of the video

@JasonBay-RealEstateInvesting 2 жыл бұрын

@@SashaYanshin Well I thought heard you say if you have 500 then, put that, then in another week you have 300 put that. maybe I missed it. All in all you have a good video there but the distinction is an important one

@DeusExAstra 2 жыл бұрын

Investing the same amount over time doesnt do anything for improving your returns, it just helps with reducing volatility. In fact, if you follow the practice of always investing a set amount, then presumably you will often have more than that and you will have money you're not investing. So not only are you not investing all the available money at the start, you're also now not investing all the available money each additional time period. You will just end up with more and more money uninvested... which will reduce your long-term returns and make it more likely you will spend that extra money. Basically, DCA sucks any way you look at it, except for the psychological benefits for people who cant handle volatility and need a fixed plan they can stick to.

@JasonBay-RealEstateInvesting 2 жыл бұрын

@@DeusExAstra as much as you can invest as soon as you can invest, then repeat, is by far the best strategy. The point of DCA is indeed to reduce volatility.

@alphapinggmbh6916 2 жыл бұрын

I've made a spreadsheet with all prices for Crypto and plugged in DCA. DCA turns out to be the worst performance compared to risk/reward ratio.

@anonnymous4684 2 жыл бұрын

Interesting. Is that by a significant percentage?

@user-yg1dg6xm2g Жыл бұрын

Thanks for this video! It makes a lot of sense. On average, the stock / crypto market will be worth more tomorrow, than it is today. Therefore - most of the time - it's better to invest everything you have today, not divided up over the next 30+ days.

@Decebal825 2 жыл бұрын

this is so true

@SashaYanshin 2 жыл бұрын

👍

@starwyq9930 2 жыл бұрын

Agree with his point. I want to clarify some areas that could be misleading. Also, this is my understanding, feel free to correct me if you think Im wrong, When he said lose money with DCA when market goes up, you arent literally losing money, you are just gaining less profit as compared to a lump sum investment. Similarly when the market goes down, you acquire less losses compared to a lump sum investment, but you are still losing money. So on a whole the traditional DCA serves as a safety net to minimize losses, while also limiting gains. His method of DCA is more like value investing. You "DCA" by diversifying your investments into different companies which, by your judgement, are undervaluing their stocks due to market circumstances. This way you get to reap all the large gains from several "lump sum investments".

@AndrexFlounder Жыл бұрын

it depends on what asset you are investing in, in the long term dca is a good accumulation strategy

@oltidurres88 Жыл бұрын

Why not to choose a dynamic/enhanced DCA? Increasing or multiplying your money input at different levels of down or up trends?

@De-Centralized 2 жыл бұрын

You 2nd version of DCA sounds similar to how M1 has their pie system. More money goes towards the stocks that have fallen below your designated allotments.

@michaelswami 7 ай бұрын

DCA is not market timing. You continually invest at Regular intervals without fail. That said, lump sum is generally more desirable.

@mr.cheapskate1867 2 жыл бұрын

Over the long term, mathematically both of these versions are basically the same. Both of these versions are DCA.

@SashaYanshin 2 жыл бұрын

In the second option you don't have a choice. That is the fundamental difference. Lump sum vs DCA whenever you have money to invest.

@hernstv 2 жыл бұрын

I DCA on SPY everytime the price falls and create support, i buy. Another way to do DCA , buy If the price falls on major moving average.

@issamituk4365 2 жыл бұрын

thanks :)

@SashaYanshin 2 жыл бұрын

👍

@PokePond 3 ай бұрын

A lot of assumptions here, first is that you can afford to pay in a lump some equal to you yearly contributions and that the price when I come to sell is always going to be higher. DCA works and has reduced risk than lump sum investing, It also reduces some of the financial barriers that face many average retail investors.

@Kamil_101 2 жыл бұрын

I also think a quite good strategy if you are new to investing and want to invest a lot at once (If you got some spare money saved up) is to do it over some period with smaller amounts each time for example you invest 40% in the first week or month up to you and then invest another 20% next period also implementing the info from the video to invest into some of the stocks you are looking at that are down at the moment could result in good gains. This is mainly for stocks if you are investing into a index fund such as the popular S&P 500 you should probably invest all your money at once as indexes are less volitile and there is less risk associated but just investing into index funds usually results in smaller % returns per year.

@robbieb2011 6 ай бұрын

I do a weighted dollar cost average. I contribite every Friday a small amoint. I add to it if stock goes below 200 day moving average....a little more if below 500...etc

@ronaldtan1590 2 жыл бұрын

Totally agree Sasha

@SashaYanshin 2 жыл бұрын

👍

@dakdur1126 2 жыл бұрын

I want to know what happens when it comes to paying taxes, I want to only sell what I bought 2 years ago, not my most recent purchase of 2 weeks ago

@jdl9623 2 жыл бұрын

I think the studies show that you are in fact correct, that lump sum investing as soon as you can is the best since 7 out of 10 years the markets are up. Also, the most bullish years of those 10 generally fares way better in comparison the the worst bear in that decade. However, this only applies if you 1) invest in a broad based EFT like VOO and 2) this is your retirement portfolio, meaning you are looking at the results several decades from whence you first invested, more like a retirement account at age 65 when you will be retired and doing the 4% withdrawal.

@kelleymcbride4633 Жыл бұрын

The trick to dca is consistency. Do it every week without fail and over months and years you will come out on top

@FlyingFun. 10 ай бұрын

And what about if you have serious money from house sale etc like £400k, would you still just throw it all in right now knowing we are in an everything bubble that really does feel like it's going to pop? The last 3 years has been brutal and 6.2% garanteed savings bond 1 year is looking very attractive right now