Dollar-Cost Averaging (DCA)

DCA is a simple strategy: invest the same amount regularly, regardless of price. Over time, this reduces the impact of volatility.

How DCA Works

Example: Invest R1,000 every month into Bitcoin.

  • Month 1: BTC at R200k → You buy 0.005 BTC
  • Month 2: BTC at R180k → You buy 0.0056 BTC (more at lower price)
  • Month 3: BTC at R220k → You buy 0.0045 BTC (less at higher price)

Over 3 months, your average cost is lower than if you'd invested all R3,000 at once.

Advantages

  • Removes emotion from investing
  • Reduces timing risk (no need to predict the bottom)
  • Builds discipline
  • Works in both bull and bear markets

Disadvantages

  • In a strong bull market, lump-sum investing beats DCA
  • Small investments may have high fees
  • Requires consistency (easy to skip months)

Tax in South Africa

Each purchase is a transaction. When you sell, SARS treats it as capital gains/loss based on your weighted average cost.