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birb_cromble  2d ago (text post)   881 thread views

Weekly Finance Thread

Since a lot of us here have expressed interest in not starving to death in a gutter, I figured I'd start a weekly thread to discuss financial matters.

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  • Remember that we're all just Internet randos. Don't bet your life savings on a hot tip from this thread.
  • Keep culture war in the culture war thread. Yes, global events may impact our personal finances, but that does not mean we have to incessantly harp on culture war aspects here. If you are going to discuss it, please stick to the practical impacts of it on an individual level.
  • Be kind. Remember that everyone here comes from different circumstances. We all have different resources available and different risk tolerances.
  • Don't let the perfect be the enemy of the good. Better is better. Celebrate people when they take a step up and work to move their finances in the right direction. Don't flame out because they haven't followed what you consider the optimal path. Everybody has to start somewhere.
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This is why I tend to DCA.

He’s correct DCA is quantitatively bad. If equities have a positive risks premium then DCA just means you invest later.

This is different than having positive market timing. I’m bearish now but DCA in general is an inferior strategy. Its main benefit is psychological since if you do it over time your less likely to be sitting on a loss even though on average it produces lower returns.

If you have a big pile up front you're right, but I do it each month as I earn the money.

Fair. I guess it’s used in the same way in the vernacular. You are just fully investing as you earn money.

If I were a financial advisor and someone came to me who just won $5m on the powerball there would be a lot of psychological reasons to DCA. Primarily me not getting fired if market goes down. If market goes down I can sell that now they get to buy cheaper. If market goes up they are happy about making money.

even then you end up missing out. research shows if you have any $ the optimal strategy is to go all in

I do it every month from cash flow, so it's not like I'm losing out much. I don't have a lump sum to sit on.

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