Dollar Cost Averaging and Value Averaging

[CandorVet]

A wealth of insight and experience in this forum, thanks everyone.

New to many of these concepts, please bear with the noob question.

So, I see there's productized DCA, and D-I-Y DCA (which provides the investor more control in counter selection, timing and amount).

My question is if you're prepared to D-I-Y, why restrict the formula to DCA?

Why not the Value Averaging formula, as it appears to amplify the effects of simple DCA?

 

[alexchia01]

A wealth of insight and experience in this forum, thanks everyone.

New to many of these concepts, please bear with the noob question.

So, I see there's productized DCA, and D-I-Y DCA (which provides the investor more control in counter selection, timing and amount).

My question is if you're prepared to D-I-Y, why restrict the formula to DCA?

Why not the Value Averaging formula, as it appears to amplify the effects of simple DCA?

When we said DCA, we meant DCA a value counter or indices. This is the same as Value Averaging.

If you are averaging a worthless bad fundamental stock, this is not DCA, this is digging your own grave.

 

[Perisher]

A wealth of insight and experience in this forum, thanks everyone.

New to many of these concepts, please bear with the noob question.

So, I see there's productized DCA, and D-I-Y DCA (which provides the investor more control in counter selection, timing and amount).

My question is if you're prepared to D-I-Y, why restrict the formula to DCA?

Why not the Value Averaging formula, as it appears to amplify the effects of simple DCA?

http://www.investopedia.com/terms/v/value_averaging.asp
Not that much of a difference it says... Keep it simple I say.

If one wants to, there are many ways to Rome.
For those who can't be bothered/don't have time etc..., DCA ETF is easy to understand and implement. For those who seek more, they will study more methods to find what suits their style of investment.

Most of the people who advises here knows of many ways to invest. But different strokes for different man so teach the basics and the rest will follow.

 

[limster]

Why not the Value Averaging formula, as it appears to amplify the effects of simple DCA?

Many people giving advice here are so new they haven't been through the last financial crisis, instead, they have just been part of the bull market. And value averaging is sort of irrelevant in a bull market.

In a bear market, you don't really need to value average either, too much calculation will lead to paralysis.

The decision is very simple. Take the last financial crisis, at STI 2,000, you look at how much cash you have left and make a decision and then follow the rule you have set. The simpler the rule, the easier to follow:

1. STI 2000 - 20% of your remaining cash
2. STI 1800 - 20%
3. STI 1600 - 20%
4. STI 1400 -20%
5. STI 1200 - 20%

 

[wahkao3]

which is best???

 

[RubiksCuber]

which is best???

Obviously the answer doesn't matter if you're getting into low-risk, high-return securities.

 

[Tornesoul]

which is best???

low risk high return is the best when fata both say buy

 

[Shiny Things]

Why not the Value Averaging formula, as it appears to amplify the effects of simple DCA?

The reason value averaging isn't a thing is that it doesn't really match up with how people invest.

Part of the reason DCA is a good idea is that it works nicely with how people usually invest. You take a fixed amount out of every paycheck and invest it, and you naturally end up buying more shares when prices are low and fewer shares when prices are high.

Value averaging, though, says "you need to make the value of your portfolio go up by a fixed amount every month" - so that means you need to think about how much cash goes into your portfolio every month. And if stocks have a big dump, you need to find a hell of a lot more money to top up your portfolio. It's an interesting idea, but I think it's completely impractical, because most people don't have that variable amount of money to invest every month.

 

[wahkao3]

Obviously the answer doesn't matter if you're getting into low-risk, high-return securities.

low risk high return is the best when fata both say buy

wa you guys memorize my words liao!

 

[CandorVet]

Understood: it's the simplicity, and practicability, that powers the success potential of DCA so nicely, isn't it! Thank you, everyone...