What are your thoughts on performing DCA daily?

Hi there,

I think it helps to know that DCA is a strategy not just oriented to time but to investment strategy too and its often up to preference. It also depends largely on your outlook on the particular market or stock you're vested in.

If people do DCA weekly, a good reason will be to buy in different tranches and it could be possible that the movements is expected (sort of but who can time the market right?) to either stay stagnant or go down even more. But do note that the fees do add up ultimately. If you aren't confident that the stocks will either go down even more to buy at a more attractive price, then this might be an option. Note also that the price movements may/may not be consequential in your whole investment time horizon as a whole. The more volatile asset classes eg. tech related stocks might be an option.

If people DCA monthly, its likely for the simple reason of budget allocation. A monthly Allocation is good if you'll not want to think of timing the market and just proceeding to enter in. Its a simple, mind-less way of investing that helps remove the emotional aspect out of investing.

Ultimately, it's important to hold a long-term investment time horizon.

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DCA was a strategy primarily purposed to help investors ride out volatility. So, it really depends what you're investing in and how volatile it is. (Returns-wise, lump-sum investing has been statistically shown to generate better returns, increasingly so with longer investment horizons.)

For example, if you're investing in money market funds which are super un-volatile, it may not make sense. If you DCA daily, weekly or monthly, it's not likely to make much of a difference. Increased effort/trouble, but no decrease in volatility. Effort to reward ratio - poor.

Conversely, if you're buying equities, which are very volatile, doing DCA might reduce smoothen the ride. But how much more will doing daily help as compared to doing monthly? 30x the effort for variable or at best a tenuous improvement in the volatility.

Don't forget cost. Some brokers charge a per-transaction/per-trade fee. If the fee is fixed, a $900 dollar investment split into 30 x $30 investments will incur 30x fees.

At the end of the day, you decide, but don't major on minor things. Ask yourself if the daily effort is worth the trouble. There are much better things to do in your life. Monthly DCA in my opinion will more than suffice.​​​