The Power of Dollar Cost Averaging

Investing in the stock market can be tricky and challenging as there is no right or wrong way to invest. That said, some investing moves could be profitable while others may end up as costly mistakes. My investment goal is to build up a good quality stock portfolio for long term growth and returns. Inspired by the legendary Warren Buffett and his Berkshire Hathaway Portfolio,  I have been using dollar cost averaging to build up my position for my stock portfolio over time. Based on this strategy, I have attempted to invest equal dollar amounts at regular intervals in five high quality stocks of $Alibaba(BABA.US)$, $Apple(AAPL.US)$, $Bank of America(BAC.US)$, $Microsoft(MSFT.US)$, $NVIDIA(NVDA.US)$ that I have shortlisted to be fundamentally sound companies with strong long term growth prospects. As timing the market accurately is almost impossible, I have bought in these stocks at a range of different prices. With dollar cost averaging, I broke my investment into parts and bought into the stocks at equal time intervals at a set monthly schedule rather than using my capital to buy all the stocks at one go. I have allocated my funds equally to each these five stocks and set aside the same amount each month to buy an equal weightage of these stocks. There is no one best day to dollar cost average. By breaking my investment into chunks, it is more manageable for me financially and helps me to avoid trying to time the market. The lower transaction costs over at $Futu Holdings Ltd(FUTU.US)$ moomoo also help to reduce trading costs for the stock purchases. Over the course of Q3, the stock prices did not seem to change significantly from the average cost price despite the market volatility, especially in September, normally considered the worst month of the calendar year for investing. This Q3 was no different and the market was unable to beat the September Curse. With dollar cost averaging, I was able to buy more of the stocks with the same capital. But this may have worked better for Q3 as the stock prices did not keep rising. While dollar cost averaging may not be suited for everyone, it has worked well for me as it not only takes away the emotional stress and anxiety with trying the impossible feat of timing the market but also helps in refraining from the FOMO attitude towards investing. Most importantly, it aligns well with my investment goal of building up a high quality stock portfolio that can withstand the test of time and any market upheavals.
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