But first, the skinny version for busy bees:
  • Dollar-Cost Averaging (DCA) is an investment strategy where you invest a fixed amount regularly, which can reduce the stress of market fluctuations.
  • Benefits of DCA include less stress, steady investment habits, and not needing to time the market perfectly.
  • Example of success: John consistently invests 100 CHF monthly, buying more shares when prices are low, leading to a growing investment portfolio over time.
  • DCA vs. lump sum investing: DCA spreads your investment, reducing risks and potentially lowering the average cost per share.
  • Yuh supports DCA with features like fractional trading, automatic investments, and commission-free ETF savings plans, making it easier for investors to start small and grow their wealth steadily.
Wall Street. Money’s mansion and a shark tank for traders chasing the next jackpot. A place of fortune, opportunity and heart-stopping risk. But don’t worry, this article isn’t about us trying to send you into a financial freefall. Instead, meet Dollar Cost Averaging (DCA) – your laid-back option that takes the emotion out of investing and provides a reliable strategy for navigating the unpredictable (shark-infested) waters of the market.

💲 What is Dollar-Cost Averaging (DCA)?

What sounds super complex isn’t actually rocket science. DCA is simply about investing a fixed amount of money regularly and automatically, regardless of what the market is doing. This could mean putting that money into your favourite stocks, ETFs, or even crypto, every month. Why, you ask? Because it’s about as stress-free and disciplined as investing gets. You buy more when prices are low and less when prices are high, averaging out the cost over time. No more trying to time the market like a Wall Street wizard with a crystal ball. And your stress level? A solid 0!

Invest like a billionaire on a barista’s budget

Imagine this one person that’s working very hard, but earns a barista’s wage. Let’s call this person John. John imagines that there has to be a way to increase his assets. Savvy as he is, he decides to start a monthly Dollar-Cost Averaging plan, investing 100 CHF into a share of his choice. What happens is that some months the market is up, and John gets a little less share for the money. Other months, the market is down, and John’s 100 CHF buys more. Over time, John isn’t sweating over daily market news or biting nails during market dips. Instead, John sees a growing investment portfolio.
 
Let’s add some numbers to the picture, shall we?
Table that shows how an investment made with the Dollar-Cost Averaging method works.
As illustrated by the table above, John was able to capitalise on a price dip in the 3rd month, which led to a significant reduction of the average cost per share. Despite encountering prices of 4 CHF or more in four out of five months, the average cost per share remained a favourable 3.70 CHF, allowing the purchase of a total of 135 shares.

What’s the deal without a Dollar-Cost Averaging strategy? 💸

Investing a lump sum without the timing factor can work, but usually comes with more risk. Market timing is notoriously hard, even for the pros, and it can lead to missed opportunities or bigger losses. Here’s a scenario where Dollar-Cost Averaging takes a back seat:
Table that shows how an investment made without the Dollar-Cost Averaging method works.
What happened here? In this scenario, the investor decided to invest the same 500 CHF in the first month, which results in an average cost per share of 5 CHF for a total of 100 shares. Sure, in a perfect world, the investor would have had a chat with his trusted fortune-teller who would have advised him to place all the money in the 3rd month. Like this, he could have walked away with 250 shares. But market volatility is unpredictable, and this is where the DCA investment strategy stands out: it spreads your investments over time, reducing the risk of missing out on the best buying opportunities.

Why is DCA the MVP of investing?

If you’re not convinced by the benefits of Dollar-Cost Averaging yet, maybe this will take it straight to your heart (at the risk of sounding pretty cheesy here): Choosing DCA is like choosing a steady relationship over a whirlwind romance with the market. It’s reliable, reduces your stress, and can lead to a fruitful long-term connection with your investments. And there’s still more to it:
1. DCA favours strong investment habits
Setting up regular, automatic contributions through Dollar-Cost Averaging isn’t just about investing—it’s about building habits that stick. It’s easy to get sidetracked and spend your investment funds on other temptations. But with automatic contributions, you’re more likely to stay committed to your investment goals, fostering discipline that pays off eventually.
2. DCA is strong on opportunities
Market timing is like chasing shadows—it’s nearly impossible to predict the exact highs and lows. DCA ensures you’re always ready to seize opportunities whenever they arise. Recent events, such as the market turbulence surrounding pandemic, serve as a prime example of the importance of maintaining a steady investment strategy. Those who stopped investing during periods of uncertainty may have missed out on significant gains when the market later rallied.
What’s more, not everyone has several thousand francs to invest at once. Investing a few hundred francs at a time is more affordable for most people, so this strategy is better suited to smaller budgets.
3. DCA leaves emotions at the door
Investing a large sum of money in a single trade can lead to heightened emotions and regrets if the timing doesn’t pan out. Dollar-Cost Averaging helps mitigate this risk by spreading out your investments over time. Behavioural economists highlight that people tend to be loss-averse, reacting more strongly to losses than gains. By investing smaller amounts consistently, you’re less likely to be swayed by market fluctuations.
Moreover, anchoring bias—a tendency to hold on to investments bought at historical highs—can cloud judgment. Dollar-Cost Averaging helps counteract this bias by diversifying your entry points, making it easier to stick to your predetermined investment plan without getting anchored to a single price point.

DCA and ETF savings plans – the dynamic duo you need to adopt

Dollar-Cost Averaging and ETF savings plans are like this power couple that’s in it for the long haul. And when you look at why that is, it’s not even surprising:
Consistency flirts with diversification
When DCA merges with ETFs, the result is a reliable and consistent investment approach. While ETFs offer inherent diversification, Dollar-Cost Averaging smoothes out market fluctuations. A perfect match!
Affordable investing
When you combine the disciplined investment approach of DCA with the low-cost nature of ETFs and the fact that you can invest a fixed amount every month, you get an efficient and affordable way to build a diversified investment portfolio over time.
Eliminate the stress
DCA and ETFs are a dynamic duo that will help you reduce the stress of identifying market highs and lows. Are you ready to reap the rewards of a gradual ansd calculated approach to building wealth?

👥 6 investor profiles that benefit from Dollar-Cost Averaging

DCA blends in so well with many different investment styles. Do you recognize yourself among these?
1. Long-term investors
Dollar-Cost Averaging can help smooth out market volatility and steadily grow your portfolio over time.
2. Regular wealth builders
Want to watch your wealth grow regularly, even in an inflationary environment? Dollar-Cost Averaging ensures your money is consistently working for you.
3. New investors
Just dipping your toes into the investment pool? Dollar-Cost Averaging is a great way to start with smaller amounts while learning the ropes.
4. Avoiders of market timing
Not keen on trying to time the market? Dollar-Cost Averaging takes the guesswork out of when to buy, making investing simpler and less stressful.
5. Consistent savers
Dollar-Cost Averaging aligns perfectly with your saving habits, effortlessly building your nest egg. Your granny would be proud of you!
6. Steady investors
Even when the market’s down, you’re committed to your investment strategy. Dollar-Cost Averaging keeps you on track, rain or shine.

🌟 Here’s why Yuh could be your
«partner in dime» for DCA

Yes, we love to be your go-to app that goes with you through thick and thin when it comes to tackling the world of investing. And DCA? It’s basically everything we stand for at Yuh. It’s about empowering you to make smart, stress-free investment choices, helping you grow your wealth at your own pace, and ultimately making you feel more optimistic not only about your finances but about your life. Remember, every great journey begins with a single step—or in this case, a regular investment.
 
At Yuh we offer you plenty of elements to make your DCA journey a success story:
Fractional Trading
Invest any amount in any security available in the app, thanks to fractional trading. Whether it’s 500 CHF or 50 CHF, every penny counts. Starting from as little as 25 CHF.
Automatic Investments
Set it and forget it with automatic investments, whether it’s weekly or monthly. Consistency is your key to success.
Commission-free ETFs
Yuh offers six ETF savings plans without trading fees, including the most popular ones, to kick-start your Dollar-Cost Averaging journey without worrying about extra fees eating into your returns.
Low fees
For all other securities, fees start as low as 0.5%, ensuring your investments stay cost-effective.
Zero custody fees
With Yuh, you can invest without worrying about hidden costs. We don’t charge any custody fees, so you keep more of your hard-earned money where it belongs—in your pocket.

A few words to wrap it up

Dollar-Cost Averaging (DCA) is a way of investing without getting your heart rate up. When you put a fixed amount into your investment picks regularly, market fluctuations work in your favor. It’s about buying more when prices dip and less when they’re high, smoothing out your investment cost over time. No need to time the market or sweat over daily ups and downs. John’s story shows how DCA makes investing accessible and stress-free, even on a barista’s budget. It’s like choosing a steady, reliable path over the market’s rollercoaster. With DCA, you build good investment habits, seize opportunities without guesswork, and keep emotions out of your financial decisions. Plus, combining DCA with ETFs? That’s a smart move for consistent, diversified growth. Yuh champions DCA, offering tools like fractional trading and automatic investments to make your financial journey smooth and optimistic.
 
Ready to take charge of your financial journey? Download the Yuh app