What is dollar cost averaging?


What is Dollar Cost Averaging?

Dollar cost averaging is an investment strategy that breaks an investment up over several periods as opposed to a lump sum. It is used as a tool to build wealth over time. You measure the amount you have invested vs. what that investment is worth now to measure profit or loss.


Why Dollar Cost Averaging?

Dollar cost averaging is an investment strategy that aims to reduce volatility. Investing smaller amounts weekly as opposed to one large purchase reduces your risk if there is a fall in the market.


Isn't the goal buy low sell high?

Not quite, although that is the plan for most speculative vehicles, Bitcoin is a bit different. Most people believe that getting rich from trading stocks or Bitcoin is easy if you just time it right. While there is some truth to that, you will most likely end up losing money while chasing the right time to buy and sell. The key to building wealth in Bitcoin is to stick with it, there will be days the price jumps down a supposed black hole, don’t panic. It is a very young asset and volatility like that is inevitable at the moment. The price will come back up just zoom out whatever graph you see.


How do I set up a dollar cost averaging plan?

It’s important to first determine what you can afford to invest comfortably and how often you would like to make that investment. Next you need to determine how you would like to purchase this Bitcoin, you can buy it yourself or use an automatic purchase service. Your best option is an automatic purchase service, they deduct money from your account and buy the Bitcoin for you. This ensures a consistent investment plan. When electing to purchase the Bitcoin yourself you might save a small amount on fees, but it is much easier to get off track with your investment plan. You can get started dollar cost averaging with the best automatic purchase service in Bitcoin, Swan Bitcoin.


Cash App Vs. Swan Bitcoin

These are the two best automatic purchase services in the U.S., they both offer you the option to make automatic recurring purchases. Swan has lower fees and is a superior choice for a dollar cost averaging platform. Cash App is better suited for instant one time transactions for a higher fee of course. If you are looking to get started saving in Bitcoin, Swan is your best choice. If you are just looking to play around and buy some Bitcoin, then Cash App is your best choice.