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Ben Carlson: A Lost Decade Of Dollar Cost Averaging

TedTed
in Fund Discussions
FYI: (The Linkster has never been a fan of DCA.)

Investors who dutifully put money into the stock market on a periodic basis over the decade ended in 2009 would have felt dejected when looking at their statements.

If you started dollar cost averaging $500/month into the S&P 500 in January of 2000, by December of 2009 you would have invested $60,000 in total. This strategy would have netted you a whopping $64k and change, not much more than the amount saved. By way of comparison, simply investing that same $500/month in one-month t-bills would have given you more than $67k.
Regards,
Ted
https://awealthofcommonsense.com/2018/10/a-lost-decade-of-dollar-cost-averaging/

Comments

  • beebee
    edited October 2018
    "By way of comparison, simply investing that same $500/month in one-month t-bills would have given you more than $67k"...without the volatility and sleepless nights. Entering these two scenarios into Portfolio Visualizer produced slightly different, but similar results...along with a lot of other interesting data such as not a single negative yearly return for ST Treasuries.

    image
  • MarkMark
    edited October 2018
    @Ted - I can understand why you're not a fan of DCAing but how would you suggest that those less wealthy or with less disposable income or investing funds go about building up their accounts?
  • davidrmorandavidrmoran
    whatever the amount, invest it when you got it, or as you get it (received over time does not really mean the same thing as intentional DCA, by choice; just the way it works out)
  • TedTed
    @MFO Members LSI vs DCA: If you have the choice one should lump sum invest.
    Regards,
    Ted
    Vanguard Study:
    https://personal.vanguard.com/pdf/s315.pdf
  • Derf
    How would DCA work out from Jan. 2008 to Dec. 2017 ? Just cherry picking time again !
    Derf
  • Old_JoeOld_Joe
    Exactly!
  • MarkMark
    OK, so any sum could be considered a LSI. Good to know.
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