If you’re thinking of investing long term but have no real strategy, it is time to start trusting math!
When it comes to what is probably the mathematically smartest way to long-term invest in a stock or coin which you truly believe in, the dollar cost average strategy is undeniably one of the best possible tools at your disposal.
The way it works
The dollar cost average strategy, to put it in simple terms, doesn’t rely on its user to find the absolute perfect moment in which he or she should buy a lump sum of an asset.
The goal here is different and, honestly, much simpler to accomplish: just put in certain amounts of money at regular intervals and… that’s pretty much it.
If you apply this the dollar cost average strategy to past data, not only you will you be able to see that is works, but you will also see how it removes any pressure you might have if you try to time the market.
Why it works
The dollar average strategy is obviously a long-term play which relies on price appreciation and dividend returns.
If you invest a little bit of money over a long period of time, you will be buying in at both the highs and the lows, meaning that you will be averaging out your investments and not be affected by them as you normally would when employing different strategies.
As such, you can agree to yourself that you will commit to a certain amount each month, for example, and let things run its course.
Moreover, by doing so, you will effectively be removing your emotions from the trading process.
How it works
If you are willing to try the dollar average strategy, the setup here is simple: the best way of doing it is simply finding a way of automating it, like, for example, setting a recurrent purchase at the first of every month, or investing in an index fund every month, and so forth.
By doing so, you will remove the psychological barrier to investing each and every month and other nuisances related to investing as you won’t be watching the price every day, nor will you spend hours of your day trying to find a dip and staring at charts.
And while it won’t guarantee you immediate results, by employing this strategy you will be guaranteeing long-term gains which would have required a lot of willpower to save if you wanted to do so deliberately.
While most social traders and social media platforms want to make us believe that every investment strategy needs to be focused on immediate profit, that is far from being true.
If you are looking for a stress-free, long-term investment plan, which will set you on your way to profitability, then trying the dollar cost average might just be the thing for you.