Dollar cost averaging (DCA all day!)

I am a very risk averse human. I get paralysed by too many options, I hate making decisions, I try to spend wisely (most of the time). Dollar cost averaging (DCA) lets me invest in crypto in a way that I’m comfortable with.

Given that I’m a giant scaredy-cat, I should probably be scared of investing in crypto. It did actually take me a long time to jump in. But so many of the things I think I know about banking/investing etc. still apply in crypto land.

For example, I have vague recollections of saving pocket money in a piggy bank to spend on something fabulous at Granny May’s Paper Shop (yes, I’m that old).

What’s the crypto equivalent of putting money in a piggy bank?

Dollar cost averaging, baby!

Simply put, dollar cost averaging is about investing smaller amounts over time, instead of a large chunk of money all at once.

I might choose to do this weekly, monthly or any time I really feel like it.

• No wine with dinner tonight – there’s an extra $30 (who am I kidding… $10 gets a drinkable bottle at Dan’s).
• Skip coffee for the week – there’s another $25 (of course I might be very unpleasant to be around)
• Save $20 on the weekly shop – hello bitcoin!

No refund policy

Crypto isn’t quite a piggy bank… or if you like that analogy, think of it like a piggy bank that your older brother knows the location of, and might smash at any point in time.

I look at my crypto money as money that I’ve spent. Instead of a pair of shoes, I’ve bought myself a bit of bitcoin. Yes, I can sell it (at a profit or loss) but I tend to look at it as money that is now just not available any more. I keep my ‘living money’ in the real-world bank.

If crypto all goes belly up, I’ll be super disappointed, but not destitute. I’m not relying on this money for anything – it’s off to the side. I know a lot of people bet the farm on crypto, but that is just not my style (for one, I don’t even have a farm!).

Ride the waves with DCA

By investing consistently (consistently-ish – I don’t have it properly set up to transfer each week or anything), the highs and lows of the market don’t effect me quite as much.

I can confidently say that I’ve bought at the very top, and at the near bottom of the prices for pretty much any crypto that I’ve bought. Trying to time the market sucks. It’s too volatile.

But, if I know I’m going to spend $50 a week (or month) on crypto, the pricing is less important. Yes I might get less sats for my cash if the price is high, but it’s still just putting money in the piggy bank. Well, not bank – piggy wallet maybe?

If the price ‘crashes’ I get more coin for my cash. As I hope that the price will go back up, it’s like I’m buying it on sale – and who doesn’t love a sale!?

Next steps

• Find out how to buy bitcoin in Australia
• See how El Salvador bet on bitcoin
• Finder has a great comparison of different ways to invest in cryptocurrency, including dollar cost averaging.