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DCA: Your Best Friend in a Bear Market?

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Elliott Lyons
Elliott Lyons

Dollar cost averaging (DCA) is an investment strategy which Bamboo enables via the round-ups and recurring top-ups tool in app. DCA is a disciplined investment strategy trusted by some of the most successful investors in the world...

We know investing is not always sunshine and rainbows though; the price goes up, down and sideways making it hard sometimes to stay patient and see the bigger picture - which is why we thought we'd put this piece together.

How Does it Work in Times Like These?

As you may well know DCA works by accumulating an asset bit by bit, over intervals such as weekly, fortnightly or monthly. You set up recurring investment plans to invest a fixed amount on the asset you want to invest in consistently over time.

By consistently investing a fixed amount of Fiat you will accumulate more assets when prices for the asset have been falling and less when the price for the asset is rising.

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In summary DCA helps reduce the risk of ‘mistiming’ your entry into an investment. With DCA, you’ll have a spread of prices, with lower-priced investments countering those which were made at higher prices and vice versa. The average cost is brought down, minimising the risk of paying top dollar for the entire investment overall.

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