Dollar Cost Averaging: A Strategy for All Seasons

When I began saving for my children’s education I never realized the impact that dollar cost averaging would have over a long period.  As I discuss in my book “Financial Planning Made Personal”, I started saving in 1998 for my kids’ education, four years before my older son was even born!

Saving so early highlights what many people know about me, I am a planner through and through practicing what I teach.  Feel free to read the book if you want to learn how I changed the account after my kids were born.

Starting early is certainly one major benefit that is seen from saving towards a goal, it has an impact.  As important as saving early is formulating a strategy of how to save towards that goal, aside from simply putting a large lump sum aside and beginning investing.  One such strategy is dollar cost averaging.

Dollar-cost averaging is an investment strategy that is based upon investing a specific amount of money at predetermined intervals, regardless of what is taking place in the markets.  The idea is that you buy more shares when prices are lower and fewer shares when prices are higher.  This strategy does a few things such as minimizing volatility, helping spread investment risk over time, and taking the emotions we as people feel when markets are up or down.

I used this exact strategy after starting the account and every month began to invest monies.  As the strategy suggest, I simply added the same amount every month regardless of what was going on in the markets.  Keep in mind that the markets did not just go higher over this time.  Overall they have been higher but there were points in time where we saw significant volatility or declines in the markets.  Some of the events you may recall were the dot-com bubble (late 1990s, early 2000’s), the 9/11 terrorist attacks, and the Great Recession (2008-2009).  Even during the precarious times, I remained steadfast to this strategy.

Fast forward to today and my first son is currently enrolled in college and we are actively using these funds for his education.  The strategy, along with having the foresight of starting so early, has put our family in the position where are withdrawals are comprised, roughly, 70% being represented by the growth of the account and only 30% being represented as our contributions.  So for every dollar we are removing from the account to pay for college today only thirty cents represent monies that we had deposited to the account, this is powerful.

Dollar-cost averaging is a strategy for all seasons and a great way to help save towards long-term goals where you may not have a large sum of money to begin an investment.  Your retirement account or 401(k) uses this strategy whether you realize it or not.  You are deferring a set amount (or percentage of your income) each month and investing it into the account regardless of what is going on in the markets, so you may already be familiar with it and hopefully, it is working for you in the same manner it has worked for me.

We would be happy to schedule a time to discuss how dollar cost averaging can be a part of your family’s financial plan.  Feel free to schedule a 30 Minute Zoom Meeting for us to discuss this and see how we may be a good fit for assisting you in getting a dollar-cost-averaging strategy in place for you.


This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult your financial advisor.

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