Description
Using the Dollar Cost Averaging effect (DCA) is an investment strategy that works well for billionaires like Warren Buffett,
but also for first-time investors. And this is mainly due to the simplicity of the strategy: basically, it's just a matter of
investing a certain amount of investment at regular intervals. This is done regardless of the price of the asset or what is
happening in the financial markets. The idea behind this strategy is that when prices are high, you can only afford to buy a
certain number of shares. When prices fall, you can buy more shares with the fixed amount you invest each period.
Then, when the market recovers, you benefit from having bought more shares at a low price. One advantage of dollar cost
averaging is that it takes emotional factors out of investing. Since you are making regular investments no matter what the
market conditions are, emotions are eliminated from the decision-making process.
For example, if the market is in a downtrend, some investors may panic and sell their holdings. With this approach, this can
be seen as an opportunity to buy at low prices. This strategy is clearly superior to approaches such as "ride-or-die" and
"market timing? which are attempts to find the right time to buy based on analytical market surveys. However, several
financial crises and many ruined careers later show us today: this investment strategy is not profitable on average and has
more to do with guesswork and risk taking than with really sensible investment behavior.
Investing with average cost effect, however, makes it possible to invest profitably and stress-free.
