1168: Don't Get Caught In the Dollar Cost Averaging Trap by Phil Town of Rule One Investing on Stock Investing Ideas

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Investing, Business, Education, Self-improvement

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🗓️ 21 May 2020

⏱️ 11 minutes

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Summary

Phil Town of Rule One Investing shares why to not get caught in the dollar cost averaging trap. Episode 1168: Don't Get Caught In the Dollar Cost Averaging Trap by Phil Town of Rule One Investing on Stock Investing Ideas Phil Town's portfolio has been ranked No. 1 by the American Association for Individual Investors when it produced a 50% rate of return. He has a passion for investing that is hard to beat and he wants to share it with you. Phil has written three New York Times #1 Best-Selling Investment Books, Rule #1, Payback Time, and Invested, and he's been invited to speak on TV shows on CNBC, FOX, and MSNBC. The original posts are located here: https://www.ruleoneinvesting.com/blog/how-to-invest/dollar-cost-averaging-vs-payback-time/ Visit Me Online at OLDPodcast.com Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is Optimal Finance Daily, episode 1168.
0:03.7	Don't get caught in the dollar cost averaging trap.
0:06.8	By Philtown of Rule 1 Investing.com.
0:10.5	And I'm Dan, I'm your host and narrator bringing you some of the best blogs on personal finance in audio form each and every day.
0:17.0	And for more of this great content being narrated to you for free, covering personal development, and much, much more, you can check out optimal living daily.
0:25.1	We've got a bunch of episodes there that you can check out too.
0:28.4	But since you're here, let's get right to it as we start optimizing your life.
0:39.0	Don't get caught in the dollar cost averaging trap by Philtown of Rule 1 Investing.com. Dollar cost averaging is the practice of buying a certain number of shares in a given stock
0:47.8	periodically so you buy a certain dollar amount of shares regardless of the price per share.
0:53.0	This investing technique supposedly reduces your risk of investing a large amount in a single stock at the wrong time.
1:00.0	You buy more shares when the prices are low and fewer shares when the prices are high.
1:05.0	Dollar cost averaging helps you keep your money, but it does not guarantee a profit,
1:09.0	much less a nice retirement, if the market drifts for 20 years.
1:13.0	Breaking down dollar cost averaging, DCA.
1:17.0	For rule number one investing, you already know what price you are willing to pay,
1:21.0	so dollar cost averaging isn't necessary. Every day there are
1:24.3	wonderful businesses that you can buy on sale. You might not be able to buy the whole
1:28.2	thing but you can certainly buy a piece and a small piece of the right business at
1:32.2	even better prices will make you rich over time.
1:35.0	Even after you buy into a business, you want the price of the part you don't own, the part you haven't bought yet, to go down.
1:42.0	That's right, down, not up. If it goes up, we do good. If it goes down, we get
1:47.4	rich. I know that sounds crazy, but remember our net worth is not about prices, at least not in the short term, it's about value.
	...

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