No-Stress Investing
A case for dollar cost averaging
Day 165 | $57,400
Confession: A few weeks ago I started to feel overwhelmed.
The feeling was odd because I really love researching companies and thinking about investing. It’s become a huge hobby for me. But I didn’t realize how much my mind was dwelling on it!
I was checking stock prices several times a day. Maybe one of my favorite stocks would dip into a “perfect” buy? Do I have enough cash in my account? Will this stock keep dropping? Is this the best buy right now? What about my other 29 stocks?
Ever felt this way?
I needed to slow down and trust my process. Stop worrying about timing the market and remind myself that I am building long-term wealth, not playing the lottery!
Enter Dollar-Cost Averaging (DCA), a tried-and-true investing strategy that pairs perfectly with tools like Fidelity Baskets.
In this article, we'll explore how DCA works, why it's so effective, and how I'm using Fidelity Baskets to build a diversified portfolio of 30 stocks while keeping my investing journey stress-free.
What Is Dollar-Cost Averaging (DCA)?
Dollar-Cost Averaging is an investment strategy where you contribute a fixed amount of money at regular intervals—weekly, bi-weekly, monthly—regardless of what the market is doing. Instead of trying to predict market highs and lows, you focus on consistency.
Here’s Why DCA Works:
When prices are high, your fixed investment buys fewer shares.
When prices are low, your fixed investment buys more shares.
Over time, this smooths out the average cost per share and reduces the risk of buying at a peak.
For example: Let’s say you invest $100 every week into a stock. Over three weeks, the stock price fluctuates like this:
Week 1: $10/share → 15 shares
Week 2: $8/share → 18.75 shares
Week 3: $12/share → 12.5 shares
In total, you’ve invested $450 and purchased 46.25 shares at an average cost of $9.73/share, even though the stock's price ranged from $8 to $12. That’s the magic of DCA—it helps you avoid emotional decision-making and smooths out market ups and downs.
Why DCA = No-Stress Investing
Let’s face it: trying to time the market is stressful. Even seasoned investors struggle to predict short-term price movements. DCA eliminates this pressure by focusing on consistency rather than perfection.
Here are some key benefits that I’ve noticed:
No Market Timing Needed: You don’t need to worry about whether today is "the right day" to invest.
Automatic Discipline: By setting up recurring contributions, you’re building a habit of consistent investing. (This is huge because the most important thing that you can do is keep investing!)
Emotional Detachment: DCA reduces the temptation to make impulsive decisions based on fear or greed.
Long-Term Focus: It encourages you to think about your portfolio’s growth over years—not days or weeks.
How I Use Fidelity Baskets for DCA
One tool that has made my DCA strategy even easier is Fidelity Baskets. If you’re not familiar with this feature, it allows you to create a custom “basket” of stocks or ETFs and allocate specific percentage weightings to each one. Every time you add money to your basket, Fidelity automatically distributes it according to your chosen weightings.
Here’s how I’ve set mine up:
I created a basket of 30 stocks that I believe in for the long term—spanning sectors like technology, healthcare, consumer goods, energy and real estate.
Each stock has a percentage weighting based on my conviction level (e.g., Visa might be 5% of the basket, while smaller companies like Landbridge might be 2% each).
Every week, I contribute a set amount (around $500), and Fidelity automatically allocates that money across my basket based on my weightings.
The best part? Fidelity also offers an option to automatically rebalance your basket back to target weights when positions drift due to market performance. This ensures that your portfolio stays aligned with your goals and targets without manual intervention—a huge time saver!
It’s worth noting that Fidelity Baskets currently charges $4.99/month for this service. While affordable for most investors, it’s something to keep in mind when evaluating whether this tool fits your needs.
DCA in Action: Lessons from the Great Financial Crisis
One of the best examples of DCA’s effectiveness comes from the Great Financial Crisis (2008–2009). During this period, equity markets were in freefall as fear gripped investors worldwide.
Many who invested lump sums at market peaks saw significant losses as prices plummeted. However, investors who applied DCA during this turbulent time fared much better:
By consistently investing fixed amounts as markets declined, they were able to purchase more shares at lower prices.
As markets recovered in subsequent years, these lower-cost shares generated significant gains.
For instance, one analysis showed that a DCA investor who started investing in September 2008 (at the height of the crisis) ended up with a 13% gain after one year. Compared that to a 17% loss for someone who invested a lump sum upfront.
This highlights how DCA can mitigate risk during periods of extreme volatility and help investors stay on track when emotions run high.
Things to Keep in Mind
While DCA is a fantastic strategy for reducing stress and risk, it’s not without limitations:
Monthly Fee: Fidelity Baskets charges $4.99/month ($59.88/year). While affordable for most investors, it may not suit those with very small portfolios.
Patience Required: DCA works best over long time horizons—it’s not a get-rich-quick strategy.
That said, if your goal is steady growth without obsessing over market timing (like I was!), DCA is hard to beat.
Final Thoughts: No-Stress Investing for the Win
Investing doesn’t have to be complicated or stressful. By combining the power of Dollar-Cost Averaging with tools like Fidelity Baskets, you can build a diversified portfolio that grows steadily over time—without worrying about market swings or perfect timing.
What do you think? Are you using DCA or tools like Fidelity Baskets in your own investing journey? Let me know in the comments—I’d love to hear about your experience!
Keep walking!
Jeremy ✌️
Disclaimer
This article is for informational and educational purposes only. I am not a financial advisor, broker, or tax professional. The information provided reflects my personal opinions and experiences as an individual investor and may not be accurate or current. All investment strategies and investments involve risk of loss. Any ideas presented may not be suitable for all investors and may not take into account your specific investment objectives, financial situation, or needs. Past performance is not indicative of future results. Always conduct your own due diligence and consult with qualified financial professionals before making any investment decisions.