While lump-sum investing at a market low seems like the best move, dollar-cost averaging (DCA) still has several advantages that make it a more innovative strategy. Here are 13 reasons why I think it’s more beneficial:
Risk Management – Even if the market seems like it’s at a low, there’s always the chance it could go lower. DCA helps mitigate the risk of mistiming the market and suffering short-term losses.
Psychological Comfort – Investing all at once requires firm conviction and a tolerance for volatility. DCA removes the pressure of trying to predict the bottom, easing anxiety and preventing hesitation.
Consistent Investing Discipline – DCA builds the habit of regular investing, ensuring that you stay invested over time rather than waiting for “perfect” conditions, which rarely exist.
Flexibility – If new financial opportunities or emergencies arise, DCA allows you to maintain cash reserves rather than committing everything at once.
Potential for Better Long-Term Results – While lump-sum investing at a low can generate substantial gains if perfectly timed, DCA often leads to more stable returns, especially in unpredictable markets, by capturing a range of prices rather than relying on one moment.
Smooth Out Market Volatility – Markets go up and down. DCA helps you ride the wave, buying at various price points and averaging your cost over time.
Builds Investing Discipline – Regular investing creates good habits. You’re not waiting for the “perfect time”—you’re just consistently building wealth.
Great for Budgeting– DCA fits easily into monthly or bi-weekly budgets, like a gym membership for your financial health.
Makes Market Entry Less Intimidating – Putting a big chunk into the market can feel scary. Dollar-Cost Averaging lets you “dip your toe” in without overwhelming risk.
Encourages Long-Term Thinking – Because you’re investing little by little, you’re less likely to obsess over short-term performance and more focused on long-term goals.
Potentially Buys More Shares – When markets are down, your set amount buys more shares. That can pay off big when the market rebounds.
Easier to Start With Less Money – You don’t need to wait until you have a significant lump sum. You can start investing with as little as $100/month and grow from there.
Automates Wealth Building – DCA works best when it’s automatic. Set it, forget it, and watch your portfolio grow over time — no stress, no second-guessing.
Chris graduated from the University of Maine, where he played hockey on a scholarship, and retired from professional hockey in 2007. In the community, he remains engaged, serving as a youth hockey coach. Chris holds the CERTIFIED FINANCIAL PLANNER™. Outside the office, he enjoys trying new food and wine, reading, traveling, playing golf and hockey, fat tire biking, and donating to local charities. His passions include being a husband and dad, lake life with the family, watching his son and daughter play sports, and spending time with his wife. To learn more about Chris, connect with him on LinkedIn.
Heisten Financial, LLC is a registered investment advisor with the SEC. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed.