Skip to site content

In this highlight, we discuss how often you should be dollar-cost averaging and what you need to know about it.

Transcript
We have a question, he says, when dollar-cost averaging into the market, "Always be buying." How often should you do it? Once a year, once a quarter, once a month, once a week, every day? What do you think? Jason knows what I'm going to say because I'm a bit obsessed with this. Let me break it down for you. Dollar-cost averaging can be done in two ways. First, there's lump sum, where you invest a big chunk of money all at once. Second, there's dollar-cost averaging through regular monthly contributions from your cash flow. Lump sum investing works out well if the amount is small and doesn't significantly impact your life. Around 80% of the time, investing the entire sum at once is favorable. However, if it's a substantial amount like proceeds from selling land or a business, it's better to spread it out over 10 to 12 months. Now, regarding consistency, even if you receive an annual bonus, you can allocate a portion to long-term investing and put it in once a year. That's still dollar-cost averaging. For those incorporating it into their monthly cash flow, such as contributing to their employer plan or Roth IRAs, the frequency is typically once a month. As you progress to step seven of the Financial Order of Operations and reach hyper-accumulation, you can also start loading up your after-tax accounts. Here's where it gets interesting. I started off investing once a month, but then I realized I always ended up buying on the 15th or 30th of the month, which was quite satisfying during market downturns. So, I decided to make it even more fun and started buying every Friday. It's become a bit of a obsession now, but I don't think I'll go beyond once a week. I haven't felt the need to dollar-cost average every day. It's more of a mental exercise and a way to maximize every dollar. While it may seem irrational, it's a mindset that excites us as financial mutants. Taking advantage of market dips and turning negatives into positives. The majority of our assets are fully invested, but it's a little trick that adds some fun to being a financial mutant. Having a plan is crucial, and aligning it with your pay periods is a great place to start. Consistency and always be buying are key. I've noticed that by nudging and peer pressuring some of our clients to save an extra few hundred dollars a month, I've indirectly contributed to their wealth. It's incredible to see how those small savings accumulate over time. Set it and forget it, and watch your wealth grow. So get out there and make it happen.
Want to know what to do with your next dollar, you need this free download: the Financial Order of Operations. It’s our nine tried-and-true steps that will help you secure your financial future.

The Money Guy Blog

Read through our thoughts and tips on how to manage your money better.

View more posts

Free Resources

Financial Order of Operations®: Maximize Your Army of Dollar Bills! Thumbnail

Free Resources

Financial Order of Operations®: Maximize Your Army of Dollar Bills!

Here are the 9 steps you’ve been waiting for Building wealth is simple when you know what to do and the order in which to...

Wealth Multiplier By Age Thumbnail

Free Resources

Wealth Multiplier By Age

If you want to set yourself up for future success, find out how much you need to save every month to become a millionaire.

Car Buying Checklist Thumbnail

Free Resources

Car Buying Checklist

Here’s how you can buy a dependable car that won’t break the bank. Our free checklist walks you through the 20/3/8 rule and strategies to...

Episodes

The 401(k) Numbers Are Lying to You Thumbnail

Episodes

The 401(k) Numbers Are Lying to You

401(k) balances are at all-time highs - but is it real progress? In this Live Q&A, we break down what the data actually means for...

How Elon Musk Made Them Rich… But Risked Their Retirement Thumbnail

Episodes

How Elon Musk Made Them Rich… But Risked Their Retirement

Building wealth is only half the battle. Mindy from Bigger Pockets Money and her husband Carl built a $10M portfolio, then hit a tax bomb,...

Financial Advisors Correct the Internet (Part 2) Thumbnail

Episodes

Financial Advisors Correct the Internet (Part 2)

Is viral financial advice doing more harm than good? In this react episode, we correct the internet once again and separate the news from the...

Financial FAQs

Courses & Tools

How about more sense and more money?

Check for blindspots and shift into the financial fast-lane. Join a community of like minded Financial Mutants as we accelerate our wealth building process and have fun while doing it.

Financial Order of Operations®: Maximize Your Army of Dollar Bills! Thumbnail

Free Resources

Financial Order of Operations®: Maximize Your Army of Dollar Bills!

Here are the 9 steps you’ve been waiting for Building wealth is simple when you know what to do and the order in which to...

Wealth Multiplier By Age Thumbnail

Free Resources

Wealth Multiplier By Age

If you want to set yourself up for future success, find out how much you need to save every month to become a millionaire.

Car Buying Checklist Thumbnail

Free Resources

Car Buying Checklist

Here’s how you can buy a dependable car that won’t break the bank. Our free checklist walks you through the 20/3/8 rule and strategies to...

Articles & Insight

A little knowledge is an amazing thing.

Get your money's worth of answers to your financial questions and more niche topics.

How To Win With Money in Your 20s (and Set Yourself Up for Life) Thumbnail

Articles

How To Win With Money in Your 20s (and Set Yourself Up for Life)

The first decade of adulthood is one of the most important periods of your life. The course your life takes when you are younger can...

The 401(k) Numbers Are Lying to You Thumbnail

Episodes

The 401(k) Numbers Are Lying to You

401(k) balances are at all-time highs - but is it real progress? In this Live Q&A, we break down what the data actually means for...

How Elon Musk Made Them Rich… But Risked Their Retirement Thumbnail

Episodes

How Elon Musk Made Them Rich… But Risked Their Retirement

Building wealth is only half the battle. Mindy from Bigger Pockets Money and her husband Carl built a $10M portfolio, then hit a tax bomb,...