Part 4/8:
However, despite these perceived advantages, the empirical evidence suggests that continually investing a lump sum outperforms dollar cost averaging approximately 65% of the time. Over a decade, the cost of engaging in DCA was estimated to be around 0.38%, which is notably higher than typical index fund fees.
Behavioral Insights: Overcoming Fear
Even in poorer market conditions, the data reflects that DCA does not necessarily shield investors from regrettable outcomes. In the darkest scenarios for lump sum investments, DCA shows a slight edge, but it still trails behind lump sum investments over 50% of the time.