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Dollar Cost Averaging 101

Many of the brightest minds in the investing world share one common trait: they recommend dollar cost averaging as an investment strategy.

But what is dollar cost averaging and how does it work?

Here's Dollar Cost Averaging 101!

👇👇👇

 1/ Dollar cost averaging, or "DCA" for short, is a simple investment strategy in which an investor splits the total amount to be invested in a given asset across regular periodic purchases.

The regular purchases occur regardless of price, volatility, or economic conditions.
2/ The goal is to remove the complexities of market timing from the process, allowing an investor to build their desired position without concern for external factors.

Its simplicity removes behavioral and psychological biases from the equation.

Let's look at an example.
3/ Imagine you want to build a $10,000 position in bitcoin. You have done your research and believe in the long-term story.

You aren't sure if it will go up or down in the near-term, so you decide to dollar-cost average.

Great decision! How will you do it?
4/ You split the $10,000 up into 20 pieces ($500 each). You could have done any number of pieces, but 20 felt right.

You decide on a weekly DCA, so every Monday, you buy $500 of $BTC, regardless of price. After 20 weeks, you have built your desired $10,000 cost basis position.
5/ Alternatively, you may not have a specific position size in mind.

You know you believe in the long-term story for $BTC, but you aren't sure about near-term movements.

You are confident it's going (much) higher eventually, but with likely volatile swings between now and then.
6/ In this scenario, you may go with a "perpetual DCA" plan. Just buy a set amount every day, week, or month, with no position size in mind.

This is an excellent approach for high-conviction, long-term investments.

(Note: Perpetual DCA is the backbone of my personal strategy.)
7/ For the vast majority of investors, dollar-cost averaging and compounding are the two concepts that should form the foundation of your long-term wealth creation strategy.

DCA + Compounding = All You Need

The best part? It's easy. Anyone can do it. https://t.co/CxhVg0WxsO
8/ There are many great tools that allow you to automatically execute against your dollar-cost averaging plan.

For equities, robo-advisors such as @wealthfront and @betterment offer automated DCA plans. @M1_finance allows for a more user-controlled strategy and experience.
9/ For bitcoin (or other crypto), @investvoyager, @BlockFi, and many others will allow you to execute a daily, weekly, or monthly automated purchase.

@RoundlyX allows you to invest your spare change in bitcoin. A neat, seamless way to DCA. It is the @acorns of cryptocurrencies.
10/ There are many experts out there that seek to over-complicate things. As you all know, I am not one of them.

In investing, as in life, keep it simple!

Dollar-cost averaging + compounding = all you need.

So that was Dollar-Cost Averaging 101! I hope you found it useful.
11/ Hat tip to @scottmelker, @APompliano and @WallStPlayboys, who have all educated their followers on dollar-cost averaging as an investment strategy.

And for more educational threads on money, finance, and economics, check out my meta-thread below. https://t.co/Jyqunbg8uM

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In 1637, the Dutch Republic erupted into a speculative fever over an unlikely item...the tulip.

Tulip Mania has become a legend synonymous with market euphoria and bubbles. But is this tale all it's cracked up to be?

Who's up for a story?

👇👇👇


1/ The tulip is a spring-blooming flower native to the valleys of the Tien Shan Mountains in Central Asia.

It is believed to have been introduced to Europe in 1554, when an ambassador of the Holy Roman Emperor sent tulip bulbs and seeds to Vienna from the Ottoman Empire.


2/ Tulips gained in popularity as people were attracted to their rich color and ability to grow in sub-optimal conditions.

They soon became a coveted status symbol for the wealthy.

The Semper Augustus, with its colorful, flame-like streaks, was the most desired of them all.


3/ By the early 1600s, the Dutch Republic was entering a golden age.

Many financial innovations popped up during this time - the first stock exchange, for example.

But it was another financial innovation that would propel tulips into historical lore: the futures contract.

4/ As tulips grow slowly and may take several years to bloom, paper contracts were written that entitled the buyer to the future tulips.

These contracts were freely-traded.

So in addition to the physical market for tulip bulbs, a thriving paper market was established.
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1/ An Allegory of Finance

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From a young age, we are taught to view the world as black and white.

But many of life’s most important truths appear contradictory on the surface.

THREAD: 15 powerful paradoxes (on growth, business, careers, and life):

Sprezzatura (“Studied Carelessness”)

You have to put in more effort to make something appear effortless.

Effortless, elegant performances are often the result of a large volume of effortful, gritty practice.

Simple is not simple.

Slow Down to Speed Up

Want to speed up? Try slowing down.

Slowing down gives you the time to be deliberate with your actions.

You can focus, gather energy, and deploy your resources more efficiently.

It allows you to focus on leverage and ROI.

Move slow to move fast.

Learn More to Know Less

The wisdom paradox - the more you learn, the more you are exposed to the immense unknown.

This should be empowering, not frightening.

“The more I learn, the more I realize how much I don't know.” - Albert Einstein

Embrace lifelong learning.


Shrink to Grow

Growth is never linear.

In order to grow, sometimes you need to shrink.

Shedding deadweight may feel like a step back, but it is a necessity for long-term growth.

This principle applies to your career, startup, or life.

One step back for two steps forward.
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I recently found out I'm going to be a father.

Here are the principles I want to teach my child to live by:

Be Interested

Talent is overrated—interest is not.

Interested people are prone to giving their deep attention to something to discover more about it.

They ask questions, listen, & observe. They open up to the world around them.

Being interested is a key to a fulfilling life.

Different is Beautiful

Growing up, I feared being different—I desperately wanted to fit in.

I made bad decisions grounded in insecurity.

I only realized later: being different is your edge—your ultimate competitive advantage.

No one can compete with you, at being you.

Work Hard

If you want to accomplish anything in life, you have to work hard.

Don't believe the hype. Hard work isn't the sexy, flashy Instagram posts saying "rise & grind”—it's the ugly, painful effort in the dark, when no one is watching.

If you want something, go get it.

Show Up in the Darkest Hour

It's easy to be there for people to celebrate their wins.

It takes character to show up for them in their darkest hour.

People never forget who supported them when the chips were down.

Be the friend who is always there—in good times and bad.
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The Feynman Technique—how to learn anything:

The Feynman Technique is a foundational learning method that prioritizes simplicity and depth of understanding.

It was developed by Richard Feynman—an American theoretical physicist who won the Nobel Prize in 1965 for his groundbreaking work in quantum electrodynamics.


So yes, you could say that Richard Feynman was intelligent...

But there are a lot of intelligent people in the world.

Feynman's true genius was found in his ability to convey extremely complex ideas in simple, elegant, digestible ways.


He had observed that complexity and jargon are often used to mask a lack of deep understanding.

As a rule:

If someone uses a lot of acronyms, complexity, and jargon to explain something to you, they probably don’t understand it.

We've all encountered this type of "expert"...

The Feynman Technique is a learning framework that forces you to develop a deep, elegant understanding of a given topic.

It involves four key steps:
(1) Set the Stage
(2) ELI5 (Explain It To Me Like I'm 5)
(3) Assess & Study
(4) Organize, Convey & Review

Let's cover each step:
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1) Get a cup of coffee.

In this thread, I'm going to walk you through "The Kelly Criterion".

2) In 1956, John Kelly published a paper titled "A New Interpretation of Information Rate" in the Bell System Technical Journal.


3) In the paper, Kelly described a simple and elegant way for investors to strategically allocate capital in the face of uncertainty.

This is what is now known as the Kelly Criterion.

4) The approach is easiest to understand with an example.

I'll keep it as realistic as possible:

Imagine that you walk into an antique store one day. Due to the persistence of the salesman there, you buy an old lamp from him.


5) You take the lamp home. You rub it. Out comes a genie. Nothing unusual.
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It is counterintuitive but, if you have N100 to invest, (a) the N100 should be a proportion of a larger income, then (b) of the N100, always reserved N25 for downturns, no matter how good it's going with the N75.
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Worried about the recent market drop?

Here are 24 top investing quotes from Buffett, Bogle, Graham, and more that can help🧵

"If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks."

-- John Bogle

"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."

-- Warren Buffett

“Individuals who cannot master their emotions are ill-suited to profit from the investment process”

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"A calm sea does not produce a skilled sailor."

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Hilo con los mejores ETF indexados de RV

Con 4-5, podéis haceros vuestra propia cartera global por un coste muy inferior al que ofrecen por ahí

Tablas con ISIN, Acum/Dist, comisión y reparto por países

🟩la menor comisión en su categoría
🟪sin comisión de compra en degiro

👇

1- MSCI World o ACWI 🌍

Un ETF que contiene todo el mundo, para los más "vagos"

Contras: emergentes pesan nada muy poco


2 - USA 🇺🇸

Imprescindible en cualquier cartera. S&P500 y Nasdaq

Muchas opciones muy baratas. Acumulación o Distribución, para todos los gustos

Atención a los recién salidos L&G y Amundi Prime que baten a los ishares y vanguard en comisiones


3 - Europa 🇪🇺

Más variedad de índices

Stoxx 600: 600 acciones, large y mid. Usado por Vanguard

MSCI Europa: 400 acciones. Usado por el resto

Stoxx 50: las 50 más grandes


4 - Emergentes 🇨🇳🇮🇳🇧🇷🇷🇺🇹🇼

A recalcar:

China pesa entre un 30 y un 40% en todos

BABA y Tencent principales posiciones (10% aprox)

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Manipulation Sign:

If you are compromising too much, there is a chance that you are getting manipulated.

Why are you the one that's always compromising?

How come the other person always gets their way?

Be more curious.

If something seems off, stick up for yourself.

'Wait, you sure I am being manipulated?'

I have no clue, that is only something that you can decide for yourself.

'Dang is there anything I need to look out for?'

Plenty..

But let me give you a few things to look out for.

👇

I see manipulation as skillfully controlling someone's behavior for egotistical or unethical purposes.

'How come people don't leave when it's happening to them?'

Because most people have 0 clue that they are being manipulated.

1. Guilt Trip

You ever made a mistake around someone, only for them to hold it over your head?

The will always bring up the mistake when you 2 are not seeing eye to eye.

These people will use that mistake as leverage to get what they want from you in the future.

Look out.

2. The Rationalizer

This person will commit the worst acts & find a way to rationalize it.

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They have every excuse in the book for why they did it.

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