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Does Dollar Cost Averaging Work When Investing?
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On this week’s episode of THE FINANCIAL COMMUTE, host Chris Galeski welcomes Wealth Advisor Patrice Bening to discuss dollar cost averaging, an investment strategy where investments are bought over time. Purchases occur regularly regardless of the asset’s price.
Here are some key takeaways from their conversation:
- Patrice shares her first experience with dollar cost averaging through her 401(k), highlighting its discipline and long-term benefits despite market volatility.
- Dollar cost averaging (DCA) can help mitigate emotional stress when investing large sums. It can also offer potential tax benefits and loss offsetting through tax loss harvesting.
- Chris emphasizes DCA’s role in systematic and automatic investing, providing stability during market fluctuations.
- Studies indicate that lump sum investing may outperform dollar cost averaging two thirds of the time, although DCA still has its benefits.
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