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With the markets getting banged up earlier this year, you have a LOT of opinions being thrown around on the best way to passively invest in the stock market.
Because of this “Dollar Cost Averaging” has been making its way around the internet again as the best thing since sliced bread…but does it actually work long term?
So in this article, I’m going to cover:
What is it?
Should you use Dollar Cost Averaging?
Does it make sense?
Is this a good strategy?
Or is Dollar Cost Averaging not so good…and just plain stupid?
So let’s dive into some examples to see if Dollar Cost Averaging is all it has been hyped up to be.
What Does Dollar Cost Averaging Mean?
The first time I remember hearing about it was in the ’90s where the market were basically just going straight up.
Around that time financial planners recommended it because, at that time, you could basically close your eyes and buy, and within a few months you would have made money.
They would suggest that at the same time every month you would purchase a particular stock or stocks, no matter what it or the rest of the market was doing.
Example: Apple
Let’s take a look at and example using Apple (AAPL).
