Debunking the Myth of Dollar Cost Averaging

The writer initially believed that dollar cost averaging (DCA) was a sensible investment strategy as it helped reduce volatility and risk. However, analyzing S&P 500 data over the past 40 years, they discovered that investing all available money, or lump sum (LS), performed better 82% of the time. Even tuning the parameters of DCA did not improve its performance compared to LS. The data analysis showed that LS yielded higher returns, although it did carry higher risk. The writer concludes that LS is usually the better strategy, and that investors should invest all their available funds as soon as possible.

https://www.alexmolas.com/blog/dca-is-suboptimal/

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