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Comment by lui8906 | Hacker News Reader

DCA has positives and negatives.

Positive, you are averaging out the risk by spreading out your purchases and averaging into your position.

Negative, time in the market beats timing the market, therefore you are better to have all your money you intend to invest in the market right away so you can enjoy appreciation, dividends etc

If you have a large lump sum to invest it can be better to buy in one go or in a shorter period. However if you earn money over time and look to invest, it makes sense to DCA each month you receive your salary rather than waiting to time the market.

NFA DYOR :)

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If you're in your early 20's and reading along in this thread, I have some wisdom to drop on you:

The real value of investing at a young age is not compound interest and having another 5-10 years of time with part of your money in the market. For most of us our earning potential will keep going up until at least our 40's, so the number of dollars you have later will swamp whatever you can save now.

The real value of starting at 25, 24, 23 is that you only have a little money to invest, and when you lose it, it will subjectively hurt more. If you wait until 30 you'll be gambling a larger pile of cash without those hard won lessons to keep you out of trouble. The money you invest at the beginning increases the effectiveness of the much larger pile of money you can invest 5 years in.

If you read enough personal finance articles, aimed at real humans, you will start to get a feel for the way in which finances, like dieting or time management, has a much larger psychological factor that the objective bean counters dismiss as if the math is all that matters. What matters most is you.

25 year old here and I definitely agree.

I've lost some money on stupid investments (buying individual tech stocks last year, buying put options right as 2020 downturn hit its v shaped recovery)

I'm just glad that the amount lost is in the low thousands, not tens of thousands.

If you earn money over time, you never had a lump sum to begin with, so of course it makes sense to “DCA” - it is your only option.

It is still time in the market over timing the market, as long as the withdrawal date is far enough out into the future.

> Positive, you are averaging out the risk by spreading out your purchases and averaging into your position.

If you want to reduce risk it's better to lump-sum invest, but allocate a smaller proportion to stocks.

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