a DCA versus All-at-once Spreadsheet
Once upon a time somebuddy mentioned that, if you have a bunch of money, then you should invest it piecemeal ... in twelve monthly installments.
>That's DCA, right?
Yes ... over 12 months. Any uninvested money (that is, until it's invested) goes into Money Market (for example).
>So is 12 installments best?
Sometimes. Anyway, it's interesting to play with this, in Excel.
The spreadsheet gives a chart which looks like this:
Right-click on the picture and Save Target file to download the .ZIPd spreadsheet.
>That's it? That's the spreadsheet?
No. To get the bigger picture you gotta download the spreadsheet.
>So ... how does it work?
You type in your bunch of money (like $12K) and some annual Return and Standard Deviation (that's the Volatility) ... that's what you're expecting
from your investments. Then enter some Money Market Rate and click a button and it'll simulate the next 12 months a thousand times and see how often
each strategy worked.
>A thousand times?
Yes ... if you ask nicely. It'll pick 12 random returns to see which strategy wins ... and it'll do this a thousand times.
>Twelve investments look pretty good, eh?
Not bad ... but all-at-once is better
>But that's for invented returns, not real, live ...
Okay, there's another spreadsheet (do the RIGHT-click trick here)
which picks a dozen consecutive monthly
returns for the S&P 500 and repeats this a thousand times ... to see if all-at-once wins over 12 monthly installments.