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Comment by shiredude95 | Hacker News Reader

in other words dca is the most effective strategy for your average investor?

No. Since the stock market goes up on average over time, it's always correct by expected value to invest sooner, rather than holding money back to DCA in installments. Intentionally doing DCA if you have a sum that you could invest sooner is trying to time the market.

DCA is a useful side effect when you're investing regularly, but on average it does not beat investing sooner.

DCA should be thought of as a portfolio strategy that is X% in your nominal portfolio and 100-X% in dollars and gradually shifting to 100% your nominal portfolio. It's an attempt to hedge against negative equities early on, but there are better hedges, and if your risk aversion makes you not want 100% equities early on, you probably don't want 100% equities later on either.

On average, sure, but what if you're worried about outcomes approaching the worst case (say 10th percentile)?

No. Invest everything that you can now (into low cost diversified index funds or ETFs) and then top it up regularly as you get more capital from whatever else it is you do to earn a living (e.g. a percentage of your salary every month, a percentage of your annual bonus, a percentage of the annual dividend from your business etc etc).

Do you have any recs? I currently use VTWAX, VTIAX, and VTSAX as my index funds. Even split between all three. I would appreciate any recommendations on what to change in terms of allocation.

They are all very good choices.

DCA only speaks to the cadence of investment and is often contrasted to (and underperforms) lump sum. The strategy as a whole could be summed up as investing in low cost diversified index funds.

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