06 Jack Bogle on Dollar Cost Averaging (2014)

dollar-cost averaging is in one sense not a particular productive idea and that is to say if you've got say you come into a million dollars from your nice deceased aunt and decide you will average into the dollars you'll probably do better most of the time nothing is universal if you invest it all in the same day and that's the plus because the longer you hold a stock the better it tends to do and the big minus is that you might have picked basically the day that I was born to start investing in in May of 1929 and in which case the the million dollars goes to 100,000 by 1933 so dollar averaging is a good way if you have a lump sum to invest to make sure you're going to do some kind of like spread out over four years do it every quarter or something like that five years and that's a that's a conservative idea the more powerful part of Dalio dollar cost averaging really is uses every year setting aside money and putting it in well sure it is and that is that kind of option that I just described is not available if you don't have the million dollars right so you're starting off and when stock prices go way up you're happy you think boy but I've been smart here but you should be sad and if stock prices go way down and you're let's say six year of investing well all of a sudden you're getting more shares for each dollar you invest so it's a it's a way of eliminating to the maximum extent possible and the bigger ease of the stock market which in the short term do things for no explainable reason except the stupidity or hope and fear and greed of investors all those emotions that get into the game so dollar cost averaging absolutely yes under those circumstances in those circumstances of the circumstances that will apply to probably 95% of all investors

Channel: Mark Witte

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Keywords: John C. Bogle (Author)

Id: Oa8MqIcMAfM

Length: 2min 4sec (124 seconds)

Published: Thu Jun 26 2014