The Rational Reminder Podcast

Episode 383: AMA #10 - Dollar cost averaging & mutual funds vs. ETFs

55 snips
Nov 13, 2025
This discussion tackles investing strategies like the surprising effectiveness of lump-sum investing over dollar-cost averaging. The hosts dive into the tax efficiency of mutual funds versus ETFs in Canada, revealing some unexpected benefits of mutual funds. They debate if technology can replace human advisors and recount their biggest investing blunders, including potentially disastrous decisions involving Bitcoin. Packed with insights, there's also a critique of buffered ETFs, shedding light on why simpler options often outperform them.
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INSIGHT

Lump Sum Usually Wins

  • Lump-sum investing outperforms dollar-cost averaging about 65% of the time in their multi-market study.
  • The 10-year annualized cost of DCA was ~38 basis points, so know the base rate before choosing DCA.
ADVICE

Check Base Rates Before DCA

  • Know the base rates before using dollar-cost averaging and weigh behavioral comfort against expected cost.
  • If DCA soothes regret, consider a more conservative asset allocation instead of delaying investment.
INSIGHT

DCA Mimics Conservative Allocation

  • Dollar-cost averaging behaves like holding a lower risky-asset allocation (about 50–65% risky).
  • A conservative static allocation usually beats DCA into an aggressive one.
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