there are two ways we can do this we can try to time the market and try to get rich or we can
dollar cost average and actually get rich over the long term i'm going to choose the second option
what's going on my friends it's bob i'm back again with another video hope you're doing well today
we're talking about dollar cost averaging which is the ability over a long period of time to actually
get the most value out of the stock market i'm going to call this the secret of how the rich
get richer somebody asked me a while ago it was i think september 2020 they said bob i think i
missed the boat on tesla and i should have bought in like when it was like a hundred dollars a share
and right now it's 400 a share that's way too much i'm afraid i missed out and because they're just
so focused on trying to time the market on when to buy a share of tesla look at where it's at at the
recording of this video it's over 800 so because they're all jacked up on the timing of the market
back then if they would have just invested over the period of time and followed what i'm about
to share with you today they would be doing just fine so i'm going to walk you through an example
i think it's going to blow your mind so get ready for that but let's talk really quick about the
details timing the market is probably one of the most stressful things and let's be honest
guys it's like being a gambler you're at a casino hall you're trying to make money and you're hoping
that it hits on black but if that roulette wheel lands on red we might lose all our money that's
kind of what you're trying to do when you're timing the market and unless you can see into
the future and know without a doubt because you're a psychic that this stock market is about to go to
the moon there's no real way to know come here a minute though if you actually can tell the future
do me a favor how many likes am i going to get on this video right here
oh god by the way i actually average about 40 likes per video hey how about we average that
up let's get as many likes as possible smash it down below why dollar cost averaging is so
freaking awesome first of all it's stress free you don't have to worry about the market being up or
being down you just continue to invest dollar cost averaging is highly strategic i think this is what
the smart people do in the stock market that are in it for the long haul these are the people that
i think 10 20 30 years from now even the people that started 10 20 or 30 years ago are at a point
where they are living their wealthy lifestyle because they did this consistently over a long
period of time let me pop up a quick example right over here is my stash app check this out this is
under my automatic investment so this is actually my main portfolio if i hit automate investments
right now every week i have ten dollars that comes out of my bank account and immediately
gets invested in the following stocks i have seven dollars going into apple i have a buck going into
the blue chips etf i got another one going into delicious dividends and then i got another one
going into aggressive mix now all ten dollars it just comes out automatically i don't have to worry
about it boom every week and it invest in all of these things i'm not worried what the stock price
of apple is regardless of that i love the ipad i love my imac i love all these things apple i have
confidence in the company so i'm going to continue to invest in it now my dollar cost average will
range which means one week it could be 150 a share and i buy a little fraction of that share the next
week it could drop but i'm still going to continue to invest that's the beauty of things like this by
the way i just did a video on this outlining my entire investment strategy per week so make sure
you check that out by clicking the link above or down in the description below to see the entire
investment portfolio plan of attack so you ready for something that's going to make your jaw drop
i'm going to give you an example of dollar cost averaging versus a lump sum investment so what are
we waiting on let's get started with the example so here's a great example of dollar cost averaging
and how it can help you over the long term so i'm going to pop up my screen here so you can check it
out so this line right here is going to represent time and guess what you get to do you get to see
my god-awful handwriting i'm sorry in advance so there's going to be two different people we're
going to talk about mr lump sum and mr dca which stands for dollar cost averaging they're going to
do two different strategies when it comes down to one particular stock so you're going to have mr
lump sum and mr lump sum what he's going to do is he's going to put in a total of 1 000
into this particular stock that's currently going for 10 per share so that means he's going to get a
total of 100 shares of this particular stock and then that's all he's going to do he's just going
to put in the 1 000 he's going to let it ride all the way through from january to july and then he
got mr dca mr dca gets paid once a week and what he wants to do is once per month he's going to
take all the extra money that he has and he's going to put 500 per month into the stock via a
dollar cost averaging strategy so we know mr lump got a hundred shares in january at ten dollars so
same thing here in january mr dca is going to purchase his amount of shares so he because
it's ten dollars and he's only investing five hundred dollars is he's going to get 50 shares
in january okay and then in february let's say the stock price goes up just a little bit now
the stock price is going up and in february it's worth 15 per share now mr lump sum he's excited
he has a little bit more money in the game but mr dca doesn't care he's going to keep on his
investing strategy so he's going to now get because the stock price is a little bit more
he's going to continue to invest his 500 which means it's going to get an average of 33 shares
in february all right then march comes along now march something weird happens with the stock it
actually drops down below to nine dollars per share all right so now mr lump sums a little bit
like bummed down he's sad he's going to mcdonald's to eat away his sadness mr dca what's he doing you
guessed it he's investing that 500 now what's cool is he's gonna get a little bit more because
it's only nine dollars a share so his 500 now buys him an additional 55 shares now april it's going
to go back up and april it is now up to let's say 13 a share okay so that means good old mr
dca gets 38 shares of his 500 in april in may something very serious happens it drops back down
this is a very high volatile stock as you can see each month brings all kinds of new wonders
and excitement but eight dollars a share in may which means that mr dca gets 62 shares 62 shares
in may boy look at that handwriting june june gets even worse guys jin goes down to five dollars a
share okay so in june this thing is just not performing well it's at five dollars a share
but uh good old mr dca because he's investing his five hundred dollars gets 100 shares in
june that's pretty freaking awesome so that's great and then july we get a rebound this stock
announces something great maybe they have a new innovation coming and everybody gets excited and
it doubles in value and it goes back up to what it originally started at at ten dollars which means
another 500 bucks he gets another 50 shares so now let's pause for a second here we are in july
and then you have two different people you have the guy that put in a thousand dollars
got his 100 shares in july he still owns the 100 shares they're now once again worth 10
and guess how much he's made nothing he's broken even which isn't really necessarily a bad thing
but let's look at mr dca because he's been investing over time consistently
not worried about if the price is up or down he now earns a total of 388 shares
so dca owns 388 shares because he's been investing over this long period of time 500 a month
his actual share price or his dollar average cost is averaged at five dollars and fifty four cents
that's his what we call average unit cost or average share cost that means even though mr dca
put in a total of three thousand five hundred dollars over the course of these seven months
with his five dollars and fifty four cents dollar cost average his value is now worth three thousand
eight hundred and eighty dollars because of that ten dollar share price which means mr dca has made
more money than the guy that just put it in once and didn't do anything further with it now let me
just throw in one more fun example let's say it's now august okay and it's before mr dca puts his
next 500 in but in august the stock price does well again and now it's up to an all-time high
of 20 per share now both mr lump sum and mr dca are in the green mr lump sum with his 100 shares
now has a total of two thousand dollars put in his portfolio which means that he grew by one thousand
dollars right now let's talk about mr dca remember he has a total of 388 shares now 388 shares
multiplied by the new twenty dollar price equals a net portfolio of seven thousand seven hundred and
sixty dollars which means that uh mr dca is now up four thousand two hundred and sixty dollars
boom and all you have to do and remember this is 500 a month let's say you only have 10 dollars
a month to get started over the long period of time you will see growth if you look at
the stock market it has averaged a growth of 10 percent over its period of time some years are
high some users low there's recessions there's periods of profitability all that kind of stuff
but if you look on the average trend the stock market has always grown
by an average of 10 percent i want to see you get rich i want to help you get rich through these
everyday personal finance videos so if you enjoyed this make sure you subscribe ring the bell so you
don't miss the next personal finance video coming here to the channel and as always continue to live
your sweet life because you're worth it have an awesome day we'll see you next time [end screen]