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Old 09-02-2020, 07:04 PM   #13
chrisloh65
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Join Date: Jun 2019
Posts: 487
Try DCA from 1997 peak to 2005 trough in STI ETF? Don't think you will come out smelling good?

When you’re dollar cost averaging, that’s not necessarily the case. It depends on how the downslope compares to the upslope and the relative contribution of dividends along the way.

For example, if the correction starts tomorrow, takes 2 months to bottom out, stays at the bottom for 2 months, then starts climbing out, and finishes its climb out over 9 months, you’re going to be better off dollar cost averaging right through all of that than dollar cost averaging after the correction (as the climb out starts). Yes, this seems counterintuitive, but it’s how the math works. Try running a scenario like that with ~1.5% net dividends and you’ll see what I mean.
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