Money MythBuster: Dollar cost averaging is good

Since you cannot predict what the market will do, the best strategy is to fully invest your money as soon as it available so you can keep your money invested for as long as possible

Ruth Saldanha 18 June, 2019 | 3:08AM

 

 

Mr. Morningstar Money Man: This is Gerdie. She’s my Gammy. She died. And she left me an enormous amount of money. I know what you’re thinking.

I should take this money and invest it in the market – a little bit at a time. This strategy, called “Dollar Cost Averaging” will give me higher returns, with lower risk.

WRONG

That would only be true if the market started to fall just as I started investing, and then switched to rising before I finally stopped.

No one can predict that! The best strategy is to fully invest your money as soon as it available so you can keep your money invested for as long as possible. Remember – time in the market trumps timing the market! This myth is busted.

About Author

Ruth Saldanha  Ruth Saldanha is Senior Editor at Morningstar.ca