The regular purchases occur regardless of price, volatility, or economic conditions.
Dollar Cost Averaging 101
Many of the brightest minds in the investing world share one common trait: they recommend dollar cost averaging as an investment strategy.
But what is dollar cost averaging and how does it work?
Here's Dollar Cost Averaging 101!
👇👇👇
The regular purchases occur regardless of price, volatility, or economic conditions.
Its simplicity removes behavioral and psychological biases from the equation.
Let's look at an example.
You aren't sure if it will go up or down in the near-term, so you decide to dollar-cost average.
Great decision! How will you do it?
You decide on a weekly DCA, so every Monday, you buy $500 of $BTC, regardless of price. After 20 weeks, you have built your desired $10,000 cost basis position.
You know you believe in the long-term story for $BTC, but you aren't sure about near-term movements.
You are confident it's going (much) higher eventually, but with likely volatile swings between now and then.
This is an excellent approach for high-conviction, long-term investments.
(Note: Perpetual DCA is the backbone of my personal strategy.)
DCA + Compounding = All You Need
The best part? It's easy. Anyone can do it. https://t.co/CxhVg0WxsO
Compounding 101
— Sahil Bloom (@SahilBloom) September 17, 2020
Albert Einstein famously said, "Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it."
But what is this great wonder and how does it work?
Here's Compounding 101!
\U0001f447\U0001f447\U0001f447 pic.twitter.com/gYdCWOeNuy
For equities, robo-advisors such as @wealthfront and @betterment offer automated DCA plans. @M1_finance allows for a more user-controlled strategy and experience.
@RoundlyX allows you to invest your spare change in bitcoin. A neat, seamless way to DCA. It is the @acorns of cryptocurrencies.
In investing, as in life, keep it simple!
Dollar-cost averaging + compounding = all you need.
So that was Dollar-Cost Averaging 101! I hope you found it useful.
And for more educational threads on money, finance, and economics, check out my meta-thread below. https://t.co/Jyqunbg8uM
1/ An Allegory of Finance
— Sahil Bloom (@SahilBloom) July 18, 2020
I have been posting a lot of educational (and humorous!) threads on finance, money, and economics.
My mission is simple: to demystify these concepts and make them accessible to everyone.
All of the threads can be found below. Enjoy and please share!
More from Sahil Bloom
More from Investing
The One with the Cash Flow Explained
It's the weekend!
— Tar \u26a1 (@itsTarH) May 15, 2021
Grab a cup of coffee, in this thread I will explain
1. What a cash flow statement is?
2. What does it tell you about a business?
3. How to analyze one?
Examples included various Indian companies.
Let's dive right in. pic.twitter.com/c8tNP26Z8K
The One with Free Cash Flow Explained
Its the weekend!
— Tar \u26a1 (@itsTarH) May 22, 2021
Grab a cup of coffee, in this thread I will explain
1. What is Capex?\U0001f4b0
2. What is Free Cash Flow? \U0001f4b8
3. What does Cash Flow from Investing and Cash Flow from Financing tells us? \U0001f4a1
Examples includes some famous companies.
Lets dive right in. pic.twitter.com/HDJgUvE8f8
The One with Mutual Funds
Its the weekend!
— Tar \u26a1 (@itsTarH) May 29, 2021
Grab a cup of coffee, in this thread I will explain
1. How to select a Mutual Fund?
2. Common and costly mistakes people make while choosing a Mutual Fund
3. Some tools and tips to help you while selecting a fund
Lets dive right in. pic.twitter.com/teelsojtn9
The One on Laurus Labs
Laurus Labs : A Visual Story
— Tar \u26a1 (@itsTarH) May 30, 2021
I am a Data Science / Machine Learning developer by profession and data along with finance are my two areas of competence.
I realize how powerful combining both of them can be, so here is a visual analysis for Laurus Labs.
- Everything you need to know
- One-stop-shop for all things smart/connected home
- Higher growth & revenue than closest public competitor $LMND/@Lemonade_Inc
Time for a thread 🧵⬇️
Hippo was founded in 2015 by Assaf Wand, an ex-McKinsey consultant and Eyal Navon, serial entreprenuer and software engineer.
Wand's interest in insurance was inspired by his father's lengthy career in the "antiquated" insurance industry. $RTP
After two years of R&D, fundraising, and product development, Hippo launched in April 2017 in California.
The company's marketing was centered on the delivery of a 60-sec quote for insurance policies, transparent process, and smart home integration.
https://t.co/msy9u2ZpST $RTP
By March 2019, with Hippo insurance available to more than 50% of the homeowners in the US, the company reported a 25% month-over-month sales growth and total insured property value of more than $50 billion, with a 93% customer retention rate.
https://t.co/D5AyWgonVp $RTP
Hippo is going after a slightly different market. Most of the new insurance companies have pitched services to renters and city dwellers made up of the mostly millennial demographic, while Hippo is aiming its services squarely at homeowners. $RTP
https://t.co/MYo9HWDmdV