- Dollar cost averaging brings higher returns on invested amounts with less risk.
- It also offers less stress because if stocks go up, it’s fine, and if they fall, it’s even better as you can buy more.
- The same strategy can be applied by the sophisticated investor around longer term market irrationalities.
Dollar cost averaging might sound like a good thing for a novice investor, and it is, but don’t forget that the sophisticated investor can also use the strategy.
Many novice and non-sophisticated investors don’t want to invest outside of the U.S. and when it comes to stocks, they just want to own a few of what they think are the best stocks. For those investors, the best strategy is to dollar cost average. More →