The Importance of Investing Regularly: Dollar-Cost Averaging?
Today, we're diving into the wild world of investing and why trying to time the market is like chasing a falling knife—you might get lucky, but more often, you're just gonna end up with a cut. The Importance of Investing Regularly: Dollar-Cost Averaging? Seriously, we unpack a listener's question about whether it’s better to wait for the perfect moment to invest. Spoiler alert: that perfect moment is a myth, my friend. Instead, we’re all about dollar cost averaging—investing a consistent amount each month, no matter what. So, grab your coffee, kick back, and let’s chat about how this simple strategy can help you ride the market waves without losing your cool or your cash!
Check the full podcast episode here
Ever tried to catch a falling knife? Yeah, it sounds risky, right? That’s how we kick off our chat today, diving into the classic Wall Street proverb about market timing. Spoiler alert: it’s super tricky! We got a listener question that really hit home: this person feels like they’re just never gonna nail that perfect moment to invest. Newsflash, folks! I think many of us live in this fantasy land where we think we can predict the market like some crystal ball-wielding wizard. But guess what? Markets are like roller coasters—up, down, all around! Instead of waiting for that dreamy moment, let’s talk about a much easier strategy: dollar cost averaging. Imagine investing the same amount each month, no matter if the market is flying high or taking a nosedive. It’s like ordering your favorite pizza every Friday—sometimes you get more slices, sometimes fewer, but you’re still enjoying that pizza, right?
Takeaways:
- Timing the market is a fantasy; consistent investing is the real deal we need.
- Dollar cost averaging helps you ride out the market's wild ups and downs, no stress.
- Don't let greed or fear mess with your investments; stay steady and watch it grow.
- Every month, invest the same amount, just like getting that Friday pizza, and chill.
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00:00 - Untitled
00:00 - Wall Street Proverbs
01:05 - Understanding Dollar Cost Averaging
03:39 - Investment Strategies: The Power of Consistency
04:31 - Understanding Dollar Cost Averaging
05:37 - Faithful Stewardship and Consistent Investing
08:11 - Encouragement for Financial Confidence
Speaker A
I thought I'd start today's show with a Wall street proverb.
Speaker A
Yes, Wall street has proverbs.
Speaker A
I was kind of surprised to find this out, but it's going to make sense here in a second.
Speaker A
Trying to time the market is like trying to catch a falling knife.
Speaker A
You might get lucky, but more often you just end up bleeding.
Speaker A
That was a great proverb to start with today.
Speaker A
Which leads me right into a great listener question we got today.
Speaker A
This question said this, Raf, I feel like I can't time the market right.
Speaker A
Should I wait for the perfect moment to invest?
Speaker A
I said, well, you know, that's an interesting idea.
Speaker A
And as I unwound this a little bit, time in the market, I thought, wait a minute, time in the market, what are they really talking about here?
Speaker A
Perfect moment.
Speaker A
And I've listen, right now, I'm gonna tell you right now.
Speaker A
When I read this question, I said, truth is, I think this person's living in fantasy land.
Speaker A
Can you really time the market?
Speaker A
Can you really find that perfect moment?
Speaker A
Not in my reality.
Speaker A
And see, the truth is this, markets go up, markets go down.
Speaker A
That's just the truth.
Speaker A
But what if you invested the same amount every month no matter what the market was doing?
Speaker A
Well, that's what I'm going to talk about on today's show.
Speaker A
I'll talk about the power of dollar cost averaging.
Speaker A
We're going to dive in that today.
Speaker A
This is Financially Confident Christian, your daily dose of gospel, grounded insight and faith driven tips to help you break the cycle of financial shame with confidence.
Speaker A
Well, thank you for joining me as we continue our investment journey together.
Speaker A
Covered many topics in this area, haven't we?
Speaker A
And the truth is, for 30 years I've guided clients in this very type of issue.
Speaker A
Many clients that I've discussed the benefits of investing over chasing that perfect timing.
Speaker A
So many people do they, oh, I'm getting that perfect timing, Rob.
Speaker A
It's going to be great.
Speaker A
I'm going to get into the right moment.
Speaker A
I'm going to make a killing.
Speaker A
But I'm going to tell you right now, it doesn't always work that way.
Speaker A
And I've personally used this dollar cost averaging in my own investments because there are times when the market feels like a storm.
Speaker A
Right now there's a huge storm going on all around us, all over the world.
Speaker A
But the market's very much like that as well.
Speaker A
But this dollar cost averaging helps you ride out those market swings with peace of mind.
Speaker A
I want to contrast two clients that I've worked with.
Speaker A
I once worked with this one Guy, he said, ralph, I am going to get in the market at the perfect moment.
Speaker A
I have been studying this, I've been, I've been researching Ralph.
Speaker A
I'm going to wait until it's the perfect moment, end up sitting on the sidelines for years because guess what, he never found that perfect moment.
Speaker A
And because he was on the sidelines, he missed major growth opportunities.
Speaker A
I'm talking about major growth opportunities.
Speaker A
But then I had this other client, not a real sophisticated investment type person, but she invested every single month, man.
Speaker A
She said to me, ralph, she goes, one thing you can count on with me, I'm going to put my investment in.
Speaker A
I don't care what the market's doing.
Speaker A
Ups and downs, sideways, front ways, doesn't matter.
Speaker A
Who do you think ended up better at the end?
Speaker A
Well, that person that consistently invested monthly got through the ups and downs and guess what?
Speaker A
They built a stronger portfolio.
Speaker A
My brokers always tell me this.
Speaker A
He says, ralph, buy the dips.
Speaker A
Well, obviously if he's telling me that, guess what that means?
Speaker A
There's going to be ups and downs.
Speaker A
The founder of Vanguard, John Bogle, said this, and I thought this is so important to share with you today.
Speaker A
Time is your friend.
Speaker A
Impulse is your enemy.
Speaker A
I want to repeat that again because it's so valuable today.
Speaker A
Time is your friend.
Speaker A
Time in the market being consistent.
Speaker A
But what's the warning here?
Speaker A
Impulse is your enemy.
Speaker A
So that's the key.
Speaker A
You got to use time in your favor and avoid that impulse feeling.
Speaker A
So I thought I might start with an analogy.
Speaker A
Most people like pizza.
Speaker A
So think of a pizza, let's say every Friday.
Speaker A
Your deal is you go buy a pizza.
Speaker A
Cost you 10 bucks.
Speaker A
Now, I'm not sure we can get a pizza for 10 bucks in the United States anymore, but let's just say you go buy a pizza for 10 bucks every Friday, same price every week.
Speaker A
Well, here's the deal.
Speaker A
The way that this stock market averaging works, think about a pizza.
Speaker A
When costs rise in the market, you get fewer pizza slices.
Speaker A
It's really that simple.
Speaker A
But then when the costs come down, guess what bonus?
Speaker A
More pizza slices.
Speaker A
But what's the moral of the story here?
Speaker A
Either way, it's Friday, you get to eat pizza.
Speaker A
Marketing works the same way.
Speaker A
The market works the same way.
Speaker A
What we're talking about here is really, really simple.
Speaker A
I'm a narrow down.
Speaker A
I like to talk things in layman's terms.
Speaker A
Simple terms, you're playing averages.
Speaker A
And dollar cost averaging takes timing off the table.
Speaker A
Like Vogel said, move away from timing.
Speaker A
You don't need to Guess anymore.
Speaker A
You're not gambling anymore.
Speaker A
And with this type of investment strategy, you buy more at lower prices, which helps you lower your average cost.
Speaker A
And that approach helps you keep from panicking because listen, the markets are going to dip.
Speaker A
What's assure this in life?
Speaker A
The markets are going up and down.
Speaker A
But here's the other side of this is why I want to really cover this today.
Speaker A
It also keeps you from getting greedy when they rise, it's so easy to say, wow, the market's up, man, I got to jump in and sell everything now.
Speaker A
Be careful of that.
Speaker A
Works the same way.
Speaker A
You want to eat every Friday, you want to have that pizza every Friday.
Speaker A
Some days are going to be more slices than less.
Speaker A
Same 10 bucks.
Speaker A
Over the years, steady investing compounds into real growth.
Speaker A
It's all about that faith and patience working together.
Speaker A
And think about this, a little bit of a biblical analogy that that small, faithful sowing, that faithful, consistent investing, it leads to steady reaping down the road.
Speaker A
That's what we're all looking for because scripture reminds us of this.
Speaker A
Consistency, diligence, faith.
Speaker A
Let's get right into the scripture.
Speaker A
I got a strong and powerful verse from the book of Galatians today.
Speaker A
This is from chapter six, verse seven.
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It says, do not be deceived.
Speaker A
God cannot be mocked.
Speaker A
A man reaps what he sows.
Speaker A
Pretty strong, isn't it?
Speaker A
What you sow, what you decide to put into those investments day in and day out, inconsistency, that's what you're going to reap.
Speaker A
Longer.
Speaker A
How about we pray together right now?
Speaker A
Lord, we come to you today.
Speaker A
We just thank you for grace.
Speaker A
We thank you for understanding that we sometimes do get greedy, Lord, and we get impractical and we want to time the mark.
Speaker A
We want to do all those things that you warned us against, Lord.
Speaker A
So today we just ask you to give us diligence, Lord, to keep investing consistently in faithful stewardship, Lord, and we just trust your wisdom and help us to ignore the fear and that greed that comes into our minds as fleshly people, Lord, and we just thank you for teaching us the value of that steady faithfulness.
Speaker A
And we ask all of these things in the name of Jesus.
Speaker A
Amen.
Speaker A
So here's my one action step for you today.
Speaker A
Really simple.
Speaker A
Today I want you to just think about a fixed monthly investment amount and commit to it.
Speaker A
Just like that Friday pizza.
Speaker A
I want you to commit to how much you're going to put into the market, regardless of market condition.
Speaker A
Now listen, you don't have to put it in the market.
Speaker A
You can put it in a savings account, you can do it in your investment, whatever you want to do it, it doesn't really matter.
Speaker A
But think about doing it and being consistent with it.
Speaker A
Because when you do that, you're building the average and you're building wealth.
Speaker A
No more living in fear of the dips in the market.
Speaker A
No more trying to time the market as like I said earlier, living in fantasy land.
Speaker A
So that's my encouragement for you today.
Speaker A
Just one simple thing, one other thing you can do for me is share the show.
Speaker A
One of the ways I'm trying to do is I'm trying to grow the show.
Speaker A
A lot of people out there are looking for this wisdom.
Speaker A
They're looking for that faithful finance, how to, how to get to peace and how to get to confidence.
Speaker A
Well, if you share the show, you can be an ambassador for the show.
Speaker A
Just send them to our website.
Speaker A
That's financially confident Christian.com say, hey listen, I got this guy Ralph, I listen to every day, got some great ideas.
Speaker A
We're doing this 30 day investment series.
Speaker A
You should check it out again.
Speaker A
That's at financially confident Christian.com and remember this, you don't need to time the market to succeed.
Speaker A
Stop playing those games.
Speaker A
Stop playing the trying to chase after those falling knives.
Speaker A
You don't need to bleed to invest.
Speaker A
Use that dollar college averaging to remove that emotion and build that consistency.
Speaker A
And it's like I said, those small steady investments, they compound into long term growth.
Speaker A
And it's that faithful sowing that leads to steady reaping.
Speaker A
So let's today remove that emotion and tame that greed.
Speaker A
And I just want to encourage you right now, you can do this.
Speaker A
You don't have to live in fear.
Speaker A
God hears your prayers.
Speaker A
I just encourage you right now, stay financially savvy.
Speaker A
Go live as a financially confident Christian.
Speaker A
God bless you.
Speaker A
And you have a great day today.
Speaker A
Ra.
