DCA vs Lump Sum: The numbers don’t lie 📊

Today I want to deep dive one of the most powerful wealth-creation strategies in crypto – I’m talking about Dollar Cost Averaging (DCA).

In this email, I’ll walk you through real examples that show just how effective DCA can be when used as a capital allocation strategy. If you’re serious about building long-term wealth in crypto, this is a strategy you’ll want to understand and seriously consider using between this bull market and the next.

Let’s dive in.

What is DCA, and why does it work so well?

DCA is where you invest a fixed amount at regular intervals, no matter what the market is doing. The interesting thing about using DCA is that you don’t have to obsess over charts or watch the market too closely. You can simply allocate on your chosen day of the week, or set a recurring buy order on your exchange and let the investing take place automatically.

So what does this look like in the real world? Let’s run some numbers.

What if you started DCAing at the worst possible time?

Many investors discovered crypto during the peak of the last bull market, around November 2021. Prices and euphoria were at all-time highs! This is typically not when we recommend entering, but let’s run the worst case scenario as an experiment.

If you invested AUD $100 into Bitcoin every week from November 2021 (peak of that cycle) until now, you’d have invested a total of $17,500.

Your portfolio today? $41,670.

That’s an ROI of +138%. 

Even though you invested in peak euphoria and we are yet to experience the exponential growth phase of this cycle, you’d still be up $24,170 in just 4 years.

Now, compare that to a lump sum strategy.

If you had invested the same amount in one go in November 2021, your portfolio would be worth $24,960 today. That’s an ROI of +42.64% and a profit of $7,460.

Still a great return, but not nearly as good as DCA.

Bear in mind that this is for Bitcoin – the slowest moving asset in crypto!

Can you imagine what a slightly more speculative crypto might be capable of?

This is why I believe regular DCA into strategic assets is something we should consider for a long-term investment plan. In my opinion, it’s one of the biggest and most underutilised opportunities of this asset class.

The long-term game is where wealth is made

Many people are attracted to crypto because of the quick wins, but there’s a whole other arena, which is consistent long-term investment. This is what we teach our clients, and it’s how Digital Wealth Group has grown to be one of the strongest education companies in crypto. We employ a conservative and balanced, long-term wealth-generating strategy, as opposed to get-rich-quick trading which gets a lot of people rekt. It’s a blueprint that has allowed me to become financially free, and it’s worked for thousands of our clients since 2017.

One of my key pieces of advice when it comes to investing is to zoom out and play the long game. We can be enticed out of money by chasing shiny objects, but this is where most investors go wrong. In my opinion, when we combine powerful bull market profit taking strategies alongside longer-term, strategic investment through DCA, generational wealth can be truly made.