It's a psychological thing. Statistically, you're better off doing it all in one go. Mentally, many people aren't. You have to be able to jump in, and then to not react if the market drops right away - whether it's 0.5% or 2% or more over a longer period of time.
But if you don't, and DCA over a few months... how will you feel if the market keeps going up during that time?
I'm in the "out of sight, out of mind" camp. I invest the money as I get it, and then I forget about it and go on with my life. If I don't, I'm going to keep thinking about it and monitoring it for months until it's all invested. I'm going to keep rethinking yesterday's decision and revising my strategy depending on today's market. It's just not worth my mental health. Put it in, and move on.
I sometimes have to remind myself that even if it goes down today, it will go back up at some point, and that I'm investing for the long(er) term, so daily, weekly or even monthly variations won't really matter two years from now.
But again, it's a very personal thing. I don't think there is a wrong answer. It's about what's right for you.
But if you don't, and DCA over a few months... how will you feel if the market keeps going up during that time?
I'm in the "out of sight, out of mind" camp. I invest the money as I get it, and then I forget about it and go on with my life. If I don't, I'm going to keep thinking about it and monitoring it for months until it's all invested. I'm going to keep rethinking yesterday's decision and revising my strategy depending on today's market. It's just not worth my mental health. Put it in, and move on.
I sometimes have to remind myself that even if it goes down today, it will go back up at some point, and that I'm investing for the long(er) term, so daily, weekly or even monthly variations won't really matter two years from now.
But again, it's a very personal thing. I don't think there is a wrong answer. It's about what's right for you.
Statistics: Posted by pasadena — Tue Sep 03, 2024 8:49 pm — Replies 15 — Views 596