The Dollar Cost Averaging Strategy : Long term investments best friend

The Dollar Cost Averaging (DCA) strategy consists of investing a fixed amount of money in an asset at regular intervals, regardless of market conditions.

DCA is among one of the simplest and most powerful strategies a Retail investor can approach.

First of all, we have to consider few important points as:

Time Horizon: defining for how much time the lifespan of the investment lasts. It is important because, based on this factor, we're going to choose on which asset(s) we're going to focus. Time horizon is also partner of compund interest.

Risk Tolerance: which kind of investment makes us feel safer? Which one could be realistically considered as a pillar in our strategy? Risk Tolerance is usually over the mere numbers, involving aspects from the emotional sphere and expectation. It clears the definition ''not every gain is success'', meaning the first point of a good investment choice is how an investor feels, second what the investment expectation are.

Budget: We have to choice the amount of cash employed in the investment. This can only happen after budgeting and studies were made, anything born without thinking, is not going anywhere.

If all of this is clear, we can dive into the strategy with an example:

Let's assume we have an income, both from having a job or running a business.
After the budgeting is made and after understanding and study why it is important to long term invest, we can assume we're ready to make a purchase.
It is really common for retails investing in something that:

Makes you own the underlying asset.

Usually indexes, stocks (if you really know what you're doing), ETFs (A global one generally).

It has more than a billion liquidity.

The last thing you want is to buy and sell at an unfair price because of lack of demand.

It is known and with a reasonable history.

The longest the story is, the easier is to check how does the asset behave in different period and cycles (crisis, booms, bubbles).

The more we know, the safer it is.

Has low fares and commissions.

Expenses eats gains, this is the most important rule.

If you're assuming risks, make 100% sure commissions don't make them useless.

If you're not investing by your own, you really should keep track of the investment expenses.