Money Guy Show The TRUTH About Dollar Cost Averaging Most Investors Miss
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May 2, 2025 Discover the debate between lump-sum investing and dollar cost averaging as strategies to grow your wealth. The discussion dives into real-world case studies and the emotional aspects that affect investor decisions. Learn how to avoid analysis paralysis with actionable tips, and understand when to apply each strategy for optimal results. The podcast also tackles the psychological challenges of timing stock sales, all while emphasizing the importance of a systematic approach to achieve financial goals.
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Lump Sum Usually Wins
- Lump sum investing wins about 68% of the time compared to dollar cost averaging when investing in the market.
- However, the average performance difference is modest, around 2%, over long periods.
DCA Outperforms in Crashes
- During the 2008 market crash, lump sum investing lost money while dollar cost averaging made gains.
- Over time, dollar cost averaging in that turmoil turned into a larger portfolio due to buying through volatility.
Start Investing Without Delay
- Avoid analysis paralysis by starting either lump sum or dollar cost averaging to invest a large sum.
- Doing something is better than sitting on cash and missing market opportunities.