There aren’t any no-brainers in investing, but DCA comes fairly close, especially for young people with access to a deferred tax solution like a 401(k)…
Michael’s amazing post on dollar cost averaging went absolutely bonkers – because he’s showing the effect of dollar cost averaging in an all new way – how many S&P 500 shares you could have bought each month of the last twenty years as the market rose and fell.
Dollar cost averaging is the easiest financial advice for all investors. 401(k) plans were set up with this concept as the default setting. critics of dollar cost averaging like to bring up the example of Japan’s bubble, which still hasn’t recovered in 30 years. Michael and Josh Brown discuss the ridiculousness of it.
Undeniably, dollar cost averaging is not risk free, does not have an answer to every question and cannot protect you from every bad thing on earth – but that is not a good reason to ignore its many benefits.
And please, let’s keep the comments on this one a “Japan-free Zone”!
You can see all the charts from Michael’s post Buy Low Buy High here
Read Michael’s update “Now Show Japan”