Dollar Cost Average – A Simple Investment Strategy with Profound Impact

You might have heard the term “DCA” (dollar cost averaging) used regularly as an investment strategy, but why is Dollar Cost Averaging considered to be the simplest and most powerful long-term investment approach?

While most who try to time and navigate markets perfectly, find themselves paying both a financial and mental tax - those who keep it simple, and average into strong assets over the long term - tend to inevitably become worthy of lore - standing out among the investing crowd, with their impressive performance - and the answer to “how did you do it” ends up surprising most with its simplicity – “DCA in, and hold for the long term”.

A major reason for this is the fact that DCA’ing consistently into a market, removes the emotional impulses of the investor, which inevitably encourages them to buy more when prices are moving up fast and the market is overheated - and to sell when markets are low, as they feel that they will continue dropping - resulting in emotional buying and selling at the worst possible times. With this major investment hurdle being eliminated, the DCA strategy tends to outperform over the long term.

This type of investment strategy is more a reflection of character than expertise - discipline, consistency, patience and humility are what underpin a long-term DCA strategy. While obtaining an average price, of strong assets, that continue rising over the long term - one can’t help but win.

While other investors invest their most valuable resource, time, into analysing markets, the DCA crowd preserve the wealth of time, achieve stress-free investing, and usually end up with greater financial wealth in the long term.

Why DCA’ing into reliable assets is a superior strategy to a bank savings account over the long term.

The main reason for this is our hidden tax, called inflation. For our current financial system with eye-watering levels of government debt to sustain itself, the inflation rate (the rate at which the currency-denominated debt is losing value) must be higher than the interest rate - on average over, the long term.

In addition to this, each time a term deposit matures, the return falls into the taxable income for that financial year, chipping away significantly at the long-term compounding effect.

With a combination of term deposits underperforming the inflation rate and the income tax on deposit returns constantly chipping away at the compounding capacity over the long term - savings deposits are a guaranteed way to lose purchasing power over one's lifetime.

Let's dig into some numbers.

The average return for gold over the past 20 years has been 10.5%

The average return for a bank term deposit over the past 20 years has been 3.37%

To compare a few scenarios, we could look at the return on simply DCA’ing a consistent amount into gold every month, over various timeframes.

The numbers above clearly show the compounding power, over a long period of time, of averaging into a reliable asset.

Compounding into Gold, rather than a bank account, over the long term - returns an additional income to the average investor, to the tune of millions - without having to keep up with markets or navigate economic cycles. A simple strategy, with a profound impact.

An easy way to facilitate such a strategy is with Ainslie’s recently launched Saver program.

As gold and silver benefit from asset inflation and currency debasement - it is a reliable way to keep up with this hidden tax of inflation - and maintain purchasing power over the long term. The price of a home in gold, 50 years ago, is similar today. However, the price of a house in Australian dollars is significantly higher, reflecting a loss in purchasing power. What an ounce of gold purchased even in Roman times, is similar to what it can today, however the Roman currency doesn’t even exist anymore.

Finally, western society has seen regular banking failures - and with bail-out laws quietly being replaced with bail-in laws, while the insurance on bank deposits remains murky - confidence in our banking sector is dropping every year.

To the avid saver, Dollar Cost Averaging into eternal, consistent assets like gold and silver, over the long term, will provide significantly greater preservation of wealth than any bank deposit.

To the avid investor, Dollar Cost Averaging into reliable, strong assets preserves their time and protects them from emotional investing.

A simple and profound investing strategy often underestimated for its simplicity – is the one that works best. Ready to put Dollar Cost Averaging into action? With Ainslie Saver, you can effortlessly invest in physical gold and silver, starting with as little as $50.

Open your account, set your strategy, and secure your financial future today.

Watch the Ainslie Insights video discussion of this article here: https://www.youtube.com/watch?v=PHzYvY5ld1A