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Investing in stocks and cryptocurrencies can be a daunting task, especially if you are new to it. There is always a risk associated with any investment, but with the right strategy, you can maximize your gains and reduce your risk. One such strategy is dollar cost averaging.
What is Dollar Cost Averaging?
Dollar cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of the price. It is a reliable way to mitigate the risks of market volatility and can help investors build a diversified portfolio over time.
How to Use Dollar Cost Averaging Strategy with Stocks?
When investing in stocks, dollar cost averaging works by regularly investing a fixed amount of money in the same stock at predetermined intervals. This strategy will reduce your risk since you will be buying shares of a stock at different prices over a period rather than all at once, lowering your exposure to market volatility. This means that if the stock price increases and decreases, you will still have some shares at a lower price, leading to an average cost.
For example, let’s say you want to invest $1000 in a particular stock over the next six months. Instead of investing the whole amount at once, you can invest $167 every month for six months, buying the shares at different prices over time. This way, your average cost of the shares will be a compromised value in case the stock’s price rises and falls.
How to Use Dollar Cost Averaging Strategy with Cryptocurrencies?
Dollar cost averaging can also be an effective strategy for investing in cryptocurrencies, where the market is highly volatile. The strategy can help reduce exposure to sudden short-term price changes and increase your long-term earning potential.
To use the strategy with cryptocurrencies, you can invest a fixed amount of money at regular intervals, such as monthly or weekly, instead of investing a lump sum. This reduces the risk of buying when the cryptocurrency market is at its highest point while also taking advantage of buying when the market is at its lows.
For instance, if you decide to invest $1000 over a period of six months, you can buy $167 worth of Bitcoin or Ethereum every month, ensuring that you buy the currency when the price is less volatile, keeping your investments safe, and reducing the market risk.
Conclusion
Dollar Cost Averaging strategy is an effective way to invest in the stock and cryptocurrency markets, maximizing your gains and reducing your exposure to risk. Investing your money in increments helps you spread your risk and leads to a lower average cost over time. By using dollar-cost averaging, you can reap the rewards of investing in the stock market or cryptocurrency market in the long-term.
Much love.
could you please do a video on exactly how to take money out from crypto? if you could, for ledger? thank you very much. these exchanges make it seem like it is the easiest thing in the world but it is not and it is the same problem one tries to escape from the financial system; access to your capital but instead it is just obstructed under the guise of security.
three stocks at the most. ask Buffet.
Appreciate this Brian. GOGY is a strong contender in the fast-growing energy drink market, with a 200% return since the launch. Invest now.
When would you suggest start CA selling ? At around 80-90 percent peak? And at how many percent of your hold price? 20-30percent each round of selling? Thank you!
Hi Brian, just wanted to ask if you thing buying calls during a market downturn would be better since you would require less capital. Personally just holding the shares outright but I would like to know your thoughts on this. Thanks in advance
Diversity is the goal!
Thanks!
Your content is amazing. Personally I would reverse the size of those buy ins starting with $300 and increasing as it goes down. Like you said if it goes up and never comes down always be thankful you made money
I first heard of DCA when I started DRIP investing in the 90s and I've been doing it ever since. It just makes sense. If you can make investments weekly instead of monthly of quarterly do it. I'm currently paid biweekly and the retirement contributions are made 26 times versus 12.
Excellent, please more lessons like that , especially about short and long term strategies ❤
I like your videos
I'm 20+ yrs to retirement and planning to invest in 3 ETFs (sp500/schd/high growth) in roth IRA. Per the 10% rule are you suggesting I find 7 more ETFs?
I like to think of it, when the stocks I own go down they're on sale, if they go down a lot it's a flash sale! Take advantage. Impossible/no need to buy all at once.
9:48 missed opportunity to insert the emotional damage meme
I'm 100% in a Roth S&P 500 index fund. I add all my extra income in it every year. Set it and forget it. 85% of financial advisors out there can't beat the S&P 500 consistently. The most famous investor himself, Warren Buffett, himself put this to a test with a million dollar bet back in 2008 and won. To each their own but for the typical investor it is a wise choice.
Ok so they are going to burn bitcoin in 2024 and the bull run starts 6 to 12 months later.. How about a video on cashing out strategies? Like do you recommend having multiple bank accounts?
Wait until there is at least a 20% correction in the market then dollar cost average. Also learn how to hedge it does no good to sit in the market when it draws down 20 – 30% or when the dollar is being depreciated. In fact sitting through one large draw down pretty much screws up your portfolio for life in that you have to almost double back the loss in order to get back even.
Best crypto and stock advice on YouTube.
Cardano is the ish
Makes no sense. Just gibberish. When you have nothing to say it takes a lot of words to say it.
Good stuff. Like fr nothing but the true
Thank you
Thanks for laying that all out! Very helpful!
Brian, You are so Cool!
It’s funny how he always pauses and takes deep breathes in his videos lol
Thanks Brian. Nobody else I know will give you this kind of great advice.
Does this apply to buying index funds. For example say you inherit a large amount of money and want to buy an index fund. Or does this only make sense for individual purchases. Would be holding long term, not short term trading.
My rule of thumb is if you start taking screen shots of gains on your portfolio whether it's for your own ego or to share or brag that's when you know it's time to sell.
Great video and rock solid strategy that an investor cannot mess up, DCA every week just as you're buying a coffee and/or going out with friends.. The big question is happiness now or for decades to come?
Thank you!