💸 Savvy FundsOpen the app

📊 ETFs & Index Funds · Lesson 8 of 10 · 90 sec

The Boring Trick That Beats Market Timing

🛒 Some people spend all year trying to guess the exact day to buy. Some people put in $100 every Monday and don't look. The second group tends to win — not because they're smarter, but because they've stopped trying to be.

💡 Key idea

Invest the same amount on the same day every month and ignore the price. That is the entire strategy.

🧠 Why it matters

Dollar-cost averaging (DCA) means investing the same fixed amount on a set schedule — say $300 on the 1st of every month — no matter what the price is doing. When prices are low your money buys more shares; when they are high it buys fewer. Over time your average cost smooths out and you never have to guess the right moment.

🌍 In the real world

📉 Two people each had $12,000 in early 2008. One waited for the bottom to invest it all at once — and got so spooked by the crash they never pulled the trigger. The other just put in $1,000 a month, automatically, straight through the crash, buying their cheapest shares at the scariest moment. A decade later the DCA investor was far ahead — not because they were smart, but because they were boring and consistent.

📌 Takeaways

  • Same amount, same day, every month — automate it
  • Low prices mean your money buys more shares (a feature, not a bug)
  • Removing the timing decision removes the emotion that wrecks returns
📈Try it: Compound interest calculator →

📖 Terms in this lesson

Dollar-cost averaging: Investing the same amount on a schedule no matter what the market is doing.

✅ Test yourself

What does dollar-cost averaging actually mean?
  1. Buying only when stocks are cheap
  2. Investing a fixed amount on a set schedule regardless of price
  3. Selling a little each month
  4. Timing the exact bottom

Answer: B · Investing a fixed amount on a set schedule regardless of price

DCA is fixed amount, fixed schedule, price ignored. Consistency over cleverness.

When prices drop, your fixed monthly investment...
  1. Buys fewer shares
  2. Buys more shares
  3. Stops automatically
  4. Loses value instantly

Answer: B · Buys more shares

Same dollars plus a lower price equals more shares. Downturns quietly work in your favor.

Start this lesson free →

Quiz, XP and streaks in the app. No sign-up needed.

More in ETFs & Index Funds