The Mogo Blog

What is Dollar Cost Averaging?

They say 'what goes up, must come down', but “down” doesn’t have to mean crashing into the dirt. Screw you, Isaac Newton!!! (Actually, Isaac Newton made some great points with gravity and we appreciate science very much. We take it back. Sorry.) So, we’re here today to teach you about a fun ‘lil term. DCA is an investment strategy based on dividing the total amount of money to be invested over a period of time, as opposed to just buyin’ it all at once. Some people do this as this can help reduce the impact of volatility on overall purchases. It also helps to avoid buying something at a really high price and then it falls. 📉 So, it’s the act of spreading your money out to buy at different prices, both high and low, because you have a belief in the long term prospect of the asset! Much like that Smash Mouth song….you’re a believer. Example time! Let’s take an asset like stocks or bitcoin. Instead of investing all your money at once, with DCA you’re spreading out the amount you want to invest over time -- i.e. buying $10 a month