[kareemsabri]

The benefit of DCA (in my mind) is avoiding market timing risk. Sure, as another commenter pointed out, if a stock is only going up you better just get in and ride it up. But who knows? If you buy at the peak of a bubble, like in January 2022, it's not so great. If you're not studying the market all day, you can't really predict where it's gonna move (or even if you are).

And of course, many of us don't have a big chunk of cash sitting around waiting to get invested.

[ricardobeat]

That’s the spirit, but it doesn’t work like that. You can’t time the market without information.

Most of the time, in the long term, investing a lump sum beats DCA even if you buy at a previous peak.

[saltcured]

I think people in the comments are assigning "DCA" to either (3) or (4) below, but having different assumptions about what the alternative might be...

1. Have a pile of cash to burn and invest it immediately, to maximize time in market

2. Have a pile of cash and sit on it to "time" a later lump sum entry to the market

3. Have a pile of cash and invest it incrementally for some ramped entry to the market

4. Have recurring income and invest it immediately as it becomes available

5. Have recurring income and save/buffer it up to revisit the alternatives (1)-(3)

6. Use credit to obtain a pile of cash ahead of income and revisit the alternatives (1)-(3)

[kareemsabri]

I consider DCA to be equal notional amount purchases of an asset at a fixed period (weekly, monthly, annually etc.). That's it really. Wherever the money comes from.