DCA lowers risk, while keeping the same EV. And the most common alternative, trying to time the market, has a long history of miserable failure by virtually all investors.
For a normal person who’s saving money off their paycheque, DCA is superior to saving up a lump sum and investing that. This is true for exactly the same reason that DCA is inferior to a lump sum in the case where you’re investing a lump sum—it gets you into the market faster, and stocks outperform cash.
DCA lowers risk, while keeping the same EV. And the most common alternative, trying to time the market, has a long history of miserable failure by virtually all investors.
It’s canonical investment advice for a reason.
Ander’s claim, which I see repeated a lot, seems to be that it is positive EV rather than neutral. That’s the bit that raises my hackles.
For a normal person who’s saving money off their paycheque, DCA is superior to saving up a lump sum and investing that. This is true for exactly the same reason that DCA is inferior to a lump sum in the case where you’re investing a lump sum—it gets you into the market faster, and stocks outperform cash.