3 months ago in March 2023, I shared why I intended to do Dollar Cost Average (DCA) into the 2 ETFs, SPY and QQQ, and how to do it automatically using Interactive Brokers (IBRK). For those who do not understand DCA, it simply means buying at regular intervals over a long period, regardless of the share price at the time of purchase. Over a long period of time, the share price averages out the highs and lows.
To read the article, refer to this link:
Why I Am Doing DCA (Automatically) For SPY & QQQ For My Long Term Investment? (20% ~ 30% Upside Potential) | Step By Step Guide To Activating Automatic Recurring Investment On IBKR
My Auto DCA will happen every Friday for QQQ with an investment capital of USD100 and every Wednesday for SPY with an investment capital of USD50. So, in this article, I wish to share how the portfolio has performed 3 months on.
From my time of first USD100 purchase into QQQ, it had risen from USD305.36 to the current share price of USD365.90, which is a jump of 19.8%.
For my portfolio, I have bought a total of 4.2447 fractional shares of QQQ at a total cost of S$1,872 (USD 100 every week for the past 3 months) and my total profit during this period is S$219, which is an 11.7% return of capital.
As for SPY, from my time of first USD50 purchase, it had risen from USD389.99 to the current share price of USD437.18, which is a jump of 10.8%.
For my portfolio, I have bought a total of 1.7106 fractional shares of SPY at a total cost of S$950 (USD 50 every week for the past 3 months) and my total profit during this period is S$61, which is 6.42% return of capital.
Concluding Thoughts
The returns from DCA may not be as huge as compared to buying at the lowest point 3 months ago but it is still pretty decent (11.7% vs 19.8% for QQQ and 6.42% vs 10.8% for SPY). Conversely, if the share prices for both ETFs have been plunging since March 23, then the loss incurred will be lower as compared to buying at the high during March.
No strategy in the world can beat the “buy-lowest, sell-highest strategy” but who can exactly master that strategy? Many gurus, financial YouTubers with tens and hundreds of thousands of followers, and top investment bank analysts have gotten it wrong this year when they predicted that the market crash is imminent. IMHO, the DCA strategy protects the downside (of a bear market) as well as protects against buying at the highest point and thus, is a relatively safe investment strategy that newbies/ beginners can consider.
You can also do it automatically (see guide here) so you don’t have to spend extra time and effort to do it every week and can avoid forgetting to do it when you are occupied with other matters in life.
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