Should You Dollar Cost Average DCA or Go All In?

00:02 And with the price of Bitcoin above two 00:04 uh $106,000 00:06 per coin, you're probably wondering, 00:08 "Okay, I should have bought more 00:09 Bitcoin." Well, of course, you should 00:11 have bought more Bitcoin. We should all 00:13 have always bought more Bitcoin. Uh so, 00:15 don't feel bad. Totally normal. Um but 00:17 you're probably thinking, "Okay, I'm 00:18 ready to buy now. What do I do?" Like, 00:20 you know, do I go all in? Do I dollar 00:23 cost average? And so, this video is 00:25 intended to talk about that. So, my 00:28 default option is whatever amount of 00:30 money you're planning to invest in 00:32 Bitcoin, just put it in. Just like go on 00:35 Coinbase, ignore the price, and just buy 00:38 as much Bitcoin as you can with whatever 00:40 financial resources are available to 00:42 you. And then, if you get more financial 00:44 resources that become available to you, 00:46 buy more Bitcoin at whatever the price 00:48 happens to be. If the price dips and you 00:51 decide you're willing to put more into 00:54 Bitcoin because the price is lower, 00:56 great. buy more Bitcoin, but don't don't 00:58 wait for a dip because if you wait if 01:00 you try to wait for a dip, it'll never 01:02 come. 01:04 You know, there's still people when I 01:05 posted that, you know, everybody ought 01:07 to be buying at 88,000. There are still 01:09 people who said, "I'm buying at 85,000." 01:11 Well, 85,000 never came. Like, we 01:14 haven't seen 85,000 since we were at 01:16 88,000. And so, you know, 20,000 of 01:19 upside has gone by um you know, since 01:23 then. And in in exchange for not getting 01:26 a a 3.4% dip from 88 to 85, now we're, 01:31 you know, $18,000 to the good. And 01:34 anybody who didn't buy missed out on 01:36 that. So, do not wait for a dip. But if 01:38 one does happen and you decide that 01:40 you're willing to up your exposure to 01:42 Bitcoin, great. Do that. Okay. 01:47 So, let's talk about why I I prefer 01:50 all-in versus dollar cost averaging. 01:53 one, it's worked well for me. Like if if 01:55 I start deciding how I'm going to invest 01:58 in something and I have to decide on 02:01 dollar cost averaging, I tend to get 02:02 decision paralysis. In fact, everybody 02:04 gets decision paralysis because if 02:06 you're not going to go if you're not 02:08 just going to put whatever money in 02:10 you're planning to put in, now you have 02:11 a decision to make, which is how much do 02:14 you put in of what you're planning to 02:16 put in? Do you put in a little bit every 02:18 week? If so, for how long? Do you do 02:21 that for 3 months, 6 months, 12 months, 02:23 3 years? And what do you do with the 02:26 money that you're not putting in 02:27 Bitcoin? Do you leave it sitting in US 02:29 dollar cash, which is melting like an 02:31 ice cube? Do you put it in a uh 02:33 certificate of deposit that gets 4% 02:36 interest? You just There's all these 02:38 decisions that mess you up. If you're 02:40 not just going to go buy Bitcoin, if you 02:43 just go buy Bitcoin with whatever 02:45 financial resources you have available, 02:48 then it's done. You hit buy and you're 02:49 done. like you don't have to think about 02:50 it anymore. You don't have to decide, 02:53 you know, are you going to put some in? 02:54 Are you going to put a quarter in? Are 02:56 you going to put a half in, three/4ers 02:58 in, two/3 in, one/ird in, and then are 03:01 you going to dollar cost the rest of it 03:02 in? You just all of those problems go 03:05 away when you just buy Bitcoin with 03:07 whatever financial resources you have. 03:09 Then you don't have to worry about all 03:11 those complicated questions. Um so also 03:14 historically just buying Bitcoin has 03:17 resulted in better returns than dollar 03:20 cost averaging. Now there is an 03:21 exception to that. In a bare market 03:24 which is a down market, a pessimistic 03:26 market which is called a bare market. In 03:28 a bare market, dollar cost averaging 03:31 tends to outperform going allin but only 03:35 for small periods of time when the price 03:37 is consistently dropping. We are not in 03:40 one of those times when the price is 03:41 consistently dropping. We are in one of 03:43 those times where the price is 03:44 consistently going up. Uh therefore, I'm 03:47 not recommending dollar cost averaging. 03:49 Uh because dollar cost averaging is 03:51 typically what you do when things are 03:53 doing the opposite of what they're doing 03:55 right now. So that's why I'm saying 03:57 whatever you can afford to buy, just buy 03:59 it. Like buy it and be done with it. 04:01 Okay. So if you decide, let's talk about 04:03 what dollar cost averaging is just in 04:06 case you know that's something you want 04:07 to understand. So dollar cost averaging 04:09 is deciding that you're going to buy the 04:11 same US dollar amount of something every 04:15 single week. Typically it's weekly. It 04:17 can be daily. It could be monthly, but 04:18 almost everybody does it weekly. So you 04:20 decide, okay, I'm going to spend I'm 04:22 going to buy a $100 of Bitcoin every 04:24 single week. And you can actually set 04:26 that up on Coinbase in a recurring buy. 04:28 So every single week, it'll 04:29 automatically draft $100 from your bank 04:31 account and buy Bitcoin with it 04:33 automatically. And I think on automatic 04:36 buys, they don't have fees. I'm not sure 04:38 about that. I know some of the different 04:40 providers have no fees on automatic uh 04:43 uh d uh automatic uh buys. Recurring 04:46 buys. They're called recurring buys, but 04:48 I can't remember. I think Coinbase has 04:50 no fees on recurring buys, but anyway. 04:51 So, you buy the same amount every single 04:53 week, and you just do that. You just let 04:55 it run. Um and you let it go run until 04:58 you can't afford to do it anymore or 05:00 whatever. So, generally that's a good 05:03 strategy for a lot of assets like the 05:05 stock market, the S&P 500 because they 05:08 tend to go up and down and it sort of, 05:10 you know, lets you buy a little bit 05:12 more. You know, $100 gets you a little 05:14 bit more of it when it's down and it 05:15 gets you a little bit less of it when 05:17 it's up and it sort of evens out over 05:18 time and it it keeps you from feeling 05:20 bad that you bought at the wrong time. 05:22 Um, but Bitcoin is so aggressive in its 05:25 price moves that it's way easier with 05:28 Bitcoin to miss out on the upside. So, 05:29 for example, with dollar cost averaging 05:31 in the stock market in general, you 05:34 could you could buy at the wrong time 05:36 and your money, you're not in the money 05:38 in the stock market for three, four, 05:40 five years, six or seven years 05:42 sometimes. So, dollar cost averaging 05:44 makes sure you're not in that position. 05:46 Uh, with Bitcoin, you're virtually 05:48 guaranteed to be up within, and I think 05:50 the probability I I posted this 05:52 previously, but I think it's like 97% of 05:54 the time you're up within three years, 05:56 and 100% of the time you're up within 05:58 four years with Bitcoin. So, um, and 67% 06:01 of the time you're up within 2 years. 06:03 And right now, I think the probability 06:05 is much, uh, you know, much better than 06:07 that because we're not in a bare market. 06:08 We're in a bull market, which means an 06:11 up market, which means a positive, you 06:13 know, everything's moving in the right 06:14 direction. But for people who dollar 06:16 cost average, they just buy the same 06:17 amount. Some sometimes it's $100, 06:19 sometimes a thousand. I've known people 06:21 who are dollar cost averaging 10,000 a 06:23 week. Um, okay. If you have the 06:25 financial resources to do that, great. 06:28 But you tend to underperform. People who 06:30 are just buying and holding, you tend to 06:32 underperform by doing that. The other 06:34 reason, again, going back to what I said 06:36 initially, the reason I don't like 06:38 dollar cost averaging is that it forces 06:41 you to make a bunch of decisions that 06:42 tend to leave you in decision paralysis. 06:45 Like how much a week and how long am I 06:48 going to leave it going? So, you got to 06:50 decide how much. You got to decide how 06:52 long you're going to keep it going. You 06:53 got to decide am I doing this weekly, 06:55 monthly, am I doing it daily, like how 06:57 often? Uh and you have to decide what is 06:60 your initial position, which means what 07:01 percent of your money you're going to 07:03 put in up front before you start dollar 07:05 cost averaging. And there's like a few 07:07 more. So in total there's four there's 07:09 somewhere between four and seven little 07:12 decisions you have to make before you 07:14 can dollar cost average because it's how 07:17 much and how much initially versus 07:19 dollar cost average and how much you 07:20 know for what period of time and what 07:23 interval and you know there's a few 07:25 other things as well and what are you 07:27 going to do with the money when it's not 07:28 in Bitcoin while it's waiting to become 07:30 Bitcoin. there's just like seven 07:32 different decisions you got to make 07:33 that's going to result in you just not 07:35 pulling the trigger and not buying the 07:36 Bitcoin which is what happens to people 07:38 all the time. So, um that that you know 07:41 the main way people invest are just 07:43 taking the money and putting it in. It's 07:45 called allin. Although nobody's 07:47 advocating you put 100% of your 07:48 financial resources in Bitcoin. Uh even 07:51 I'm at like well it was like 97%. It's 07:53 probably getting close to like 98% now 07:55 but it's like let's call it 97%. Even 07:57 I'm at 97% of my liquid assets. Uh which 08:00 is not 100%. Uh although 97% is pretty 08:03 close. Um so uh you can dollar cost 08:06 average or you can do allin which means 08:08 all in whatever money you have decided 08:10 that you are going to buy a bitcoin. You 08:12 just go ahead and buy it now which is 08:15 what I recommend. Or, you know, you can 08:17 do half and half, which is you take half 08:19 of the money that you want to put in 08:20 Bitcoin and you put it in right now and 08:23 the other half you figure out these 08:25 complicated multi-art, you know, 08:27 decisions to decide how to dollar cost 08:29 the other uh other half of it. The 08:31 fourth thing you can do if you're not 08:33 doing allin or dollar cost averaging or 08:36 half of each is you can come up you can 08:39 use a method that I I don't I think I 08:41 came up with it myself, but I probably 08:44 didn't. I probably I've read so many 08:45 books I probably got it from some book 08:46 somewhere. But if I did, I can't 08:47 remember. I think I think I came up with 08:50 this myself, but it's probably also in a 08:52 thousand different investment books that 08:54 I haven't read or maybe some I did read 08:56 that I forgot. Give me one second. 09:05 And that is that you can invest the 09:08 amount of money where psychologically 09:11 half of you wishes it would go up 09:14 because you have enough money in that 09:16 you would enjoy the upside, but the 09:17 other half of you wishes your investment 09:19 would go down so that you can buy more. 09:22 It basically guarantees that you never 09:24 really lose because if it goes up, well, 09:26 it's up and if it goes down, you buy 09:28 more. But in some ways it also 09:30 guarantees you never really win because 09:33 if it goes up you wish you had uh you 09:36 know you wish I had bought more before 09:38 it went up. And if it goes down you're 09:40 thinking dang if I had just waited a 09:42 little while I could have bought my 09:45 money at the lower price. But uh it's a 09:47 it's a great way to dip your toe in the 09:49 water. And it gets over the decision 09:50 paralysis of somebody trying to decide 09:52 you know when to buy and how much to buy 09:54 and all that sort of stuff. It's like 09:55 great let's just make it easy. What 09:58 amount of money do you want in Bitcoin 10:00 where half of you would wish it goes up 10:02 and the other half of you would wish it 10:04 goes down? So if you put that amount of 10:07 money in Bitcoin, in some ways you can't 10:09 lose because if it goes up you're happy 10:11 because your money's going up and if it 10:13 goes down well you're also happy because 10:15 you think wow I could buy more and 10:17 that's what I wanted to do anyway. So, 10:19 sort of guaranteed you don't fully win, 10:20 but also guarantees you don't fully 10:22 lose. And it's a good way of 10:23 psychologically getting over the hurdle 10:25 of how much do I invest? And you know, 10:27 the decision paralysis is like great, 10:29 just invest however much makes you part 10:32 of you wish it goes up and part of you 10:34 wish it goes down in price. Then you 10:36 won't really be disappointed either way. 10:38 But anyway, regardless, I think now is a 10:40 fantastic time to invest in Bitcoin. At 10:43 some point if Bitcoin's continually 10:45 grinding down for what appear appears to 10:48 be a solid, you know, trajectory, I will 10:51 probably start recommending people 10:52 dollar cost average. 10:55 I don't think that's going to happen in 10:57 the next 6 months. Probably not in the 10:58 next 12 months and maybe never. So, you 11:01 know, for now it seems if you know any 11:04 extra money I have every time a paycheck 11:06 hits every two weeks, boom, straight in 11:08 Bitcoin. No questions asked. It just 11:10 straight in Bitcoin. I mean, I don't 11:12 think about it. I don't care what the 11:13 price is. It just goes any financial 11:15 resource that I can get my hands on or 11:17 that's free up or I realize I'm not 11:18 going to need for something. Boom. 11:21 Straight in Bitcoin. No matter the 11:23 price, boom, straight in Bitcoin. And 11:25 then obviously move to uh self-custody 11:27 in Bitkey for anything other than just, 11:30 you know, the day-to-day balance I need 11:31 to keep in Coinbase just to make sure my 11:33 debit card always works. So everything 11:35 else I keep in supercure cold storage. 11:38 Again, I recommend bit key.orld world is 11:41 their website bitke.w 11:44 WLD 11:45 and uh anyway, great time to buy a 11:47 Bitcoin and for all of you who bought 11:49 Bitcoin in the past, it's been a super 11:51 fun especially last six weeks. So 11:53 anyway, and I think we just have a long 11:55 long long way to go before uh you know, 11:58 Bitcoin's going to 500,000 or a million 11:60 a coin. Easy. Easy. That's before it 12:02 breaks a sweat and really has to compete 12:04 with gold. Bitcoin has to go 750% more 12:09 before it even starts really competing 12:11 with the price of gold. uh gold's worth 12:13 like 18 trillion and Bitcoin is only 12:16 worth two trillion. So there's a long 12:17 way to go even to compete uh with gold 12:20 and then we can start debating whether 12:22 it's two times better than gold, three 12:23 times better than gold, five times 12:25 better than gold. So but regardless, you 12:27 got 700 you got a an 8x at least eight 12:31 times its current value. Uh somewhere 12:34 between eight and nine times its current 12:35 value just to get to the point where the 12:38 total market cap of of Bitcoin is 12:39 equivalent to the total market cap of 12:41 gold. We got a long way to go and it's 12:43 going to be a very exciting ride for 12:45 decades to come, but especially the next 12:47 few years. Thanks everyone.