Anonymous
Given the crisis right now, and the principles of Dollar Cost Averaging (DCA), is it a good time to increase the DCA amounf during a recession?
My thinking is that you will "own" more stocks (as compared to when you keep it the same), and thus when the price go up, the value of your stocks will go up, and thus the amount you profit is higher.
Is that true?
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Pang Zhe Liang
25 Mar 2020
Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)
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Dollar cost averaging does not work all the time. This is especially true for single stocks. This is because the individual company may not survive the current situation and forced to get delisted from the exchange.
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Dollar Cost Averaging
Instead, dollar cost averaging works better for funds, e.g. ETFs, unit trust. This is because of the diversification that it is able to achieve as compared to a single stock.
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