Dollar Cost Averaging Criticism: High Transaction Costs
Investing | (0)
Dollar cost averaging is an investment strategy that seeks to minimize market timing risk by spreading the investment of a large sum of cash over a fixed period of time. This investment strategy is not without its critics. Though hailed by many personal finance experts and bloggers as a great investing strategy, DCA has not been as widely accepted among academics. According to its detractors, there are three main problems with dollar cost averaging: it increases overall transaction costs, doesn't meaningfully protect you from timing risks, and in most cases provides sub-optimal performance as compared to other methods of ...