One of the smartest ways to buy Bitcoin is to dollar cost average (or DCA for short) your money into the asset. This investing strategy can reduce your stress and make investing in Bitcoin automatic. If you participate in a 401(k) plan through your work, you’re probably already using DCA as an investment strategy. Every paycheck, some money is automatically moved into your 401(k) retirement account and buys the mutual funds (or other investments) that you chose when you signed up regardless of the price of those funds. Each month, you buy more and more, and as the investment goes up in price your total value increases. If the asset (index fund, or Bitcoin) drops in value, you get to buy it at a discount!
Let’s take a real life example. The average household income in the US is about $60,000/year. In 2021, Americans are typically saving about 10% of their income. This means that the average American should be able to save about $500/month. Each year, that’s $6,000. Over 5 years, you’d have $30,000 in your savings account.
Now, let’s imagine you had invested that $500/month into a savings account and earned a 1% interest. After 5 years, you’d have $30,749. Had you invested in the S&P 500 over the same time period, you would’ve ended up with $43,097 since the stock market returned around 14%/yr during those 5 years. So, the next question is: how much would your $500/month savings be worth if you had bought Bitcoin (BTC) each month for 5 years?
Starting in the Summer of 2016, if you had started buying just $500 worth of Bitcoin (BTC) each month, you’d end up with more than $354,000 by the Summer of 2021, just 5 years later. Bitcoin started a Bull run (when the market goes up in value) in 2017 that culminated in an all-time-high price of close to $19,000/BTC in Jan of 2018. That would’ve been just 18 months after you started buying Bitcoin, and your $9,000 of savings would’ve been worth more than $88,000 at that time!
Then, Bitcoin went into a bear market (when the market doesn’t go up) for about 2.5 years until the Summer of 2020. By DCA’ing each month, you would’ve been buying Bitcoin at these low prices all throughout. So, when Bitcoin started it’s next Bull run, you’d have 4 years of buying it ready to ride the increase. Even though you had only saved a total of $30,000 ($500/mo times 5 years), the value of your savings invested in Bitcoin would be worth more than $350,000! This is when the price of Bitcoin is around $47,000/BTC. Check the current price and multiply that times the approximately 7.5 BTC you’d own!
Dollar cost averaging (DCA) is a great way to reduce the impact of volatility. Volatility means the price goes up and down a lot in a short period of time. But if you expect an investment to go up over the long term, then DCA will average out the cost each time you buy a little more. Bitcoin is famously volatile, and some investors are afraid of buying it at too high of a price. Bitcoin is also famous for going up in value a lot over at least a few years. So, the smart way to buy Bitcoin as an investment is to DCA, or dollar cost average into it just like people DCA into mutual funds in their retirement accounts.
Where to DCA savings into BTC
The best place I’ve found to consistently DCA into Bitcoin is to use SwanBitcoin. They’ve stripped away all of the noise and made it super simple to buy Bitcoin in regular intervals of your choosing. If you want to start saving $250 each month in Bitcoin, SwanBitcoin is the easiest place to do it.
- Sign up for an account
- Add a bank account
- Set up a regular savings plan
Once you set up a Bitcoin savings plan to DCA into Bitcoin regularly, you can relax and wait for your investment to grow over time. This is not a get-rich-quick scheme. This is one of the smartest ways to grow your wealth over time. And there’s no better investment to grow wealth than Bitcoin.
If you want to see how much your money would’ve been worth if you’d started DCA’ing into Bitcoin, play with the calculator over at www.DCABTC.com.