F
FatherDougal
Guest
Which , in the current climate , is the optimum method of depositing funds in one's pension - monthly sums or Lump sum at end of tax year , for self-employed? Tx & blessings on you all!
The last paragraph from the wikipedia article:Monthly would be better from a "dollar" cost averaging point of view towards mitigating the effects of transient volatility.
Dollar cost averaging has been widely criticized by economists and academic finance researchers as more of a marketing gimmick than a sound investment strategy (a way to gradually ease worried investors into a market, investing more over time than they might otherwise be willing to do all at once). Numerous studies of real market performance, models, and theoretical analysis of the strategy have shown that in addition to having the admitted lower overall returns, DCA does not even meaningfully reduce risk when compared to other strategies, even including a completely random investment strategy.
I never claimed that DCA was "optimal" or perfect and I also said "mitigate" not "minimize".The widespread notion that dollar-cost averaging can help minimize the risk of investing all of one's capital in the market at an inappropriate time is aptly stated by Malkiel ...