Dollar-cost Averaging through a Crash

In my previous post, I wrote that it took the market 25 years to recover to its 1929 pre-crash levels. However, if you didn’t start out with a lump sum, but instead used dollar-cost averaging to buy into the market during this period, you would have generated some nice returns. This excellent post shows the calculations.

With current elevated market volatility, dollar-cost averaging makes even more sense as you are likely to pick up more shares at low prices. That strategy should work well in this environment — provided, of course, that you believe that the market will eventually recover!