I’m really sorry it’s coming so late – it’s been a really hectic week.
If you’re keeping up with me on this journey, then by now you should have made a deposit or bought a stock 👀 If you’re on track, WELL DONE🥳🥳
If you’re not, today’s newsletter might help. If you’re anything like me, even when you have the money and know what you want to invest in, you get stuck trying to decide the best time to buy and then you do nothing. I’m still in deep regret about the last time this happened me to because I would have been up over 100% if I had invested 😢 but it led me to the topic of this newsletter.
So, I’m going to talk about an investment strategy I have been applying that has really benefited my portfolio [and my stress levels]; Dollar Cost Averaging aka DCA.
FYI: I’m really excited to share this because we just rolled out a new feature called Recurring Purchase that lets you automate dollar-cost averaging.
First, what is dollar-cost averaging and why should you care? DCA is a simple but really smart way to invest that involves investing a fixed amount of money at regular intervals, regardless of whether the market is shooting up or falling down. I talk a lot about how a long-term mindset is key to maximising your returns in the stock market but dollar-cost averaging is one of my strongest secrets behind long-term investing.
The natural behaviour of the stock market is to go up and down but by dollar-cost averaging (investing a consistent amount over time), you’re less exposed to the volatility of short-term price fluctuations. You also lower the average cost of your trades and this can work to your advantage when prices rise in the future. Here’s an example from the Bamboo team on how dollar-cost averaging can help reduce your cost.
As I mentioned earlier, dollar-cost averaging also stops you from falling into the temptation of trying to time the market. Here’s a quick article on why timing the market is bad for investors like you and I. Instead of spending all that energy trying to time the market you can automate your investing and focus on the rest of your life 😊😊
That’s all from me but please try out the new recurring purchase feature and let me know what you think at [email protected].
I’ll see you next week!