You can still end up overinvesting and getting your self into the same kind of lack of an emergency fund, even with DCA.
DCA does not completely reduce the problem of overinvesting, but surely it can manage the overinvestment temptations that cause people (maybe moreso newbies, but it can happen to anyone who is overly investing and not sufficiently preparing emergency funds and projecting out cashflows for a sufficient amount of time in advance)..
Hmm, It really depends on how they execute the DCA, more likely 90% of the DCA supports or beginners execute it in the wrong way. Aggressive accumulation is not good at all, even if it's done with the DCA, You should shape it into the smart DCA with your own decision-making power.
I do think that in many cases, DCA is going to help people who might have tendencies to try to overly time the market, but if they establish and aggressive DCA that uses near or all of the cash reserves every month without sufficiently creating an emergency fund they could get themselves into trouble.
The essence of DCA is to eliminate the tendency of investing under duress such as forfeiting your basic needs so you can buy bitcoin. This might not be the best approaching as it can drain you psychologically and even deny you peace of mind. The reason for accumulating wealth is for the peace and comfort it brings, this means that any method you are adopting that does not give you this peace can never be regarded as DCA.
That's not correct @adultcrypto. Just because DCA has an ability to bring peace of mind, and less needs to worry about your investment, it does not completely remove the possibility that some people might still worry or that some other BTC investment strategy might bring them more peace of mind because it suits them better to be lump sum investing, buying on dips and/or whatever other strategies that they choose. They may well need to be more active with their investment, and perhaps that is what you were aiming to say. .that DCA allows someone to be an active investor without having to be active... whereas some other strategies might take a bit more managing.. but not even that is completely true because there could be ways that someone is able to set up the parameters for whatever system that s/he follows that is even less worrisome for them (and even less active) than DCA.
Lump sum buy bitcoin one time and then completely forget it for 20 years.. that's pretty inactive and it might even give that person a lot of peace of mind to just not think about bitcoin for 20 years or whatever might be his/her timeline.
Don't get me wrong. I do think that DCA is the best for an overwhelming majority of normies.. but people are surely free to choose their own variation of systems and even truly/sincerely believe that it is better for them.. and perhaps they are correct in terms of their personality and/or their financial circumstances.
Howbeit, we can make acceptable sacrifices to be able to secure the future but we should be able to have some limits.
When you hear DCA, the first thing that should come to your mind is buying Bitcoin in a way it will not affect your urgent needs. Like JJG have said, DCA can help you manage the problem of overinvesting because it does not require buying at bulk
Fair enough.. and some people are not able to buy in bulk anyhow, and some people are able to buy in bulk, but they might find it to be more helpful to figure out a way to pace out their investment into bitcoin through some kind of a DCA approach.
Your frequently going through a need to cash out of some assets that you do not want to is likely a sign that you are overinvested in those assets and/or your emergency fund is not large enough.. and sure, you likely already know that... but you might be spending a bit too much time trying to make sure that your value is "working" and then you end up overdoing it and not having enough of the "nonworking" asset/currency that you need to pay your expenses.
I have been in this situation before, where I was frequently selling my Bitcoin to meet basic needs. Until today, I never realized it was poor planning that got me into that situation. There was never emergency funds in place because I just bought the Bitcoin when I had huge amount of money thinking I will save it for the future.
Failing to sufficiently establish either an emergency fund and/or sufficient reserve funds for other kinds of regular expenses is an easy mistake to make.. .and sometimes you can see it in theory, but when it comes to practice, you might have to practice for a long time to be able to figure out the level of balance that works for your actual situation rather than what it looks like on paper.