1. It is true that the UK and US stock markets have always gone up over the long term, but investors are not all joined together as some sort of average entity all sharing each other's average wealth spread out over an infinite number of initial investment moments. The reality is that we are all individual investors and we have emotions that affect our well being. So for anyone investing a very large cash windfall all at once (e.g. from inheritance, or the proceeds of a business sale, etc) it makes sense to try to protect one's sanity by entering the market in a manner that reduces the chances of being the person nurturing a huge loss for a decade or more, because they invested it all just before a huge crash. So it probably makes good sense to aspire to lower and smoother returns (a good Sharpe ratio) and DCA might help achieve that.

   It is true that DCA produces a probabilistic lower average return, because it means spending a little less time fully invested in the market, but surely that could be a price worth paying in order to get a smoother return and mitigate the worst horrors of the stock market. Losing 35% of your lump sum investment and not breaking even for the next decade would be horrendous.

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2. Takes a lot of work though to review the stocks, you are now saying you are a better stock picker than a full time fund manager + their team! Research shows even full time fubd managers fail to beat the market 90% of the time long term. If you are doing that good on you and you should probably start your own fund. Personally I believe you would be better to advise people to DCA into a global low cost ETF. Boring but that's the right way long term for most people. Also you should mention the main reason for DCA is psychology and to stop people from doing what is not in their best interests by selling out should their investments immediately capitulate if they had invested at the peak of the market.

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3. I think there's a very important point you're missing.

   Maximum average return is not what everyone should be aiming for.

   Sure, on average, you should invest it all now and let the money work for you for as long as possible, and this works in instances where you don't need the money eventually.

   But in reality for most people what is most important is, atleast when investing a sizeable chunk all at once, risk adjusted return.

   It's all well and good having a higher average return by what, 4%? If dumping it all in at once instead of buying over a year. However the higher average return is not going to feed your retirement when you invest and then the market drops 50% over the next month, as you said yourself, setting you back for years.

   I don't disagree that if you had an infinite amount of money, or literally no need for it ever, that the 'dump it all now' strategy produces the best average returns. But that completely disregards any actual need for the money or the fact that average returns are no good if you get stuck with the massive loss

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4. all you have said is correct based on the criteria you offered. you neglected to speak to time horizon. time heals all as long as it is enough time.

   planning is about reaching goals. end stop. yes you should try to optimize your returns BUT NOT at the risk of reaching the goal.

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5. Really helpful video. I’m only just about to start my investing journey and you hit the nail on the head with how fear of missing out wrestles with fear of getting it wrong. As I’m early on in the learning curve I’ve been watching a lot of content and I have to say this is my favourite channel so far. Really comprehensive and balanced discussions, and the rants against immoral hype boys has reaffirmed my opinion. Great work and I’ll be back for every video of not-financial-advice 👍🏻

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6. Excellent video. Dabbled with DCA and value averaging for many years. Bad, bad idea & lots of regrets. Abandoned this approach as indeed 2 out of 3 times, lump sums trumps DCA.

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7. this video is hypocritical and presents a lot of conflicting information. appreciate the time & effort, but it's not at all what's expected for a quality argument against DCA

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8. The
   stock market has been a really tough one this past year, but I watched an
   interview on CNBC where the anchor kept mentioning "…marissa
   saponare…". This prompted me to get in touch with her, and from October
   2020 till now we have been working together, and I can now boast of $540k in my
   trading portfolio

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9. Completely disagree. Some of your logic is incorrect. You said DCA would lose you money because the market tend to go up. That's just mathematically wrong. You don't lose any money, you just gain less than if you put all the money in at the start. The point of DCA is to reduce risk, but at the cost of reducing gain as well. It's good for volatile stocks where price fluctuate 15 to 30% a week like Tesla for example. If you dump all your money at the peak of TSLA stock, you might see a loss for months. DCA would guarantee you make steady gain.

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10. Absolutely!
    With regards to DCA I would also like to mention it may sometimes worth opening a new position in different account rather DCA example you have 200 shares at £15and it goes down to 9. You can only spend 300. Such a little amount in comparison to your initial position will not DCA effectively. It worth opening a new position in different account with super cheap cost bases.
    It had worked out for me well.

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11. The market is not designed to always go up. The US stock market has done so but there are many other markets that has not. A good question would be why has the US stock market behaved like that and will it continue to do so in the future. Then you propose a plan that you call dollar average but it is not. Maybe you are confused. Picking a subset of stocks from a larger basket that trade lower is not dollar cost average. It rather looks like timing the market, but again it is not that either.

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12. Hi, what I find more than not is when the market is high, websites including youtube encourage you to invest the lump sum, but when the market is near or at the bottom of a bear market you get a lot of websites and YouTubers encouraging you to do DCA. how strange?
    A better way to think about this is using a financial calculator or spreadsheet and comparing the two methods. one should also think about bear markets and how long the average length is, and how big they are on average. one should have a plan in place for taking advantage of one, if when they happen.

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13. A lot of people get it very wrong because they blindly apply that strategy. Dollar Cost Averaging is a very good strategy if you are investing in index fund, diversified ETFs. Also for people who do not have time to read the financial news, they do not know how to read the chart.
    But if you are investing in individual stock and If you know the knife is falling why would you try to catch it rather than wait for a while until they settle on the floor, bottom.

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14. Based on your theory, I have accumulated a large amount of money because I didn't know how investing works. With that large amount of money , would you just put it right away into the market? And then progressively add any new money into the market?

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15. From my pov your strategy depends on how intrested and how much time do you have for investing, if you do this full time, probably there are better strategies than instantly putting money in as you get your paycheck, if you don't want to allocate a. lot of time ..yes this is a solution

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16. Lions front load their 401k's at the beginning of the year for this reason, but it only works during a bull market. A bear market definitely requires dollar cost averaging. Fortunately, bull markets vastly outnumber bear markets.

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17. Poor description of what dollar cost averaging is trying to achieve on several levels:
    a) DCA is supposed to reduce the risk of losing money. It is natural to expect a reduction in P/L if you take lower risk (no free lunch after all). All discussions that do not consider risk are unfortunately flawed. Please provide a reference that shows DCA underperforms on a risk adjusted basis.
    b) DCA can be applied over vastly different intervals and for different purposes. If you want to average in the market over several years, it is obvious that the market is expected to move up and one could miss on higher profits due to lower exposure. But if you want to average over a day-week (i.e., guarantee that you buy close to VWAP) then market direction is essentially random. If you want to reduce exposure to significant market risks (e.g., FED tapering, interest rate changes, covid, etc.) you can DCA over several months. If a company has an unproven business model, spreading purchases over multiple quarters is a viable strategy to increase exposure gradually as the company proves itself and becomes less risky. DCA generally is a very useful tool to deal with various kinds uncertainty.

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18. This is the best explanation I’ve come across of how DCA works and in my view if you have done some homework on your stocks, is more often than not a bad idea. As you say, the other sort (which I don’t even think should be called DCA) is a excellent way to maximise returns in a similar fashion to the benefits of compound interest….. in the days when interest was worthwhile! I think of that sort of regular investing as continuous investing of surplus income in order to make my money work for me as hard as possible. Thank you.

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19. Dollar cost averaging mitigates the majority of volatility & uncertainty in the long term.

    During a recession or period of economic downturn dollar cost averaging is more competent than lump sum investing

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20. Why is 'Timing the market" being made out to be such a mystery? Even just the basic techincals of trend channels, resistance and support and using Heiken Ashi can make a huge difference to an investor or trader, ^oo^

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21. By dollar cost averaging you're reducing the risk of "buying on the top"; this comes at the price of missing out on gains on average. If you're averse of risk and have relatively short timeframe it might make sense to do it?

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22. Sasha, what would you advise if you get a very large lump sum of money. Would you still put that all into the stock market, following the principle of DCA? or keep some liquid, i guess incase there is a crash in the market.??? If and when things drop, if you don't have any money to invest, it unfortunate to lose that opportunity to further invest. Your advise?

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23. Hej Sasha. Very informative video. Im new to investing, just 3 months ago I bought my first stocks. If one has a monthly savings account in etfs and so forth, is it not dollar cost averaging in that case? Because you are putting in money every month and that money is invested in a series of etfs that you choose. Anyway, would love your input. Thank you very much

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24. I watched this to see if your explanation made sense and it does. I was glad to see that I had done it the best way without ever really thinking much about it, and it really has been very successful.

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