- How does dollar-cost averaging work, and why can it be more effective than trying to time the market?
- What real-world examples show the success of dollar-cost averaging in both individual and national investment strategies?
- What are the main advantages and limitations of using dollar-cost averaging compared to lump-sum investing?
- Why does dollar-cost averaging lessen the effects of emotions like fear and greed on investment choices?
Until very recently, every morning at 9 AM in El Salvador, a government clerk had logged into a trading account to execute the same order: buy one Bitcoin. The order always went through in seconds. Whether the market was in a bullish phase, experiencing a crash, or in a rally, it made no difference. The clerk had executed the order every day since November 2022.
The daily Bitcoin buying had been part of President Nayib Bukele’s vision. According to him, El Salvador would accumulate Bitcoin daily “until it becomes unaffordable with fiat currencies.” At the time of writing, the country holds 7,475 bitcoins, valued at roughly $700 million, as BTC hovers above $90,000. This means an average price of $46,471. Importantly, it also means a whopping ~100%+ return on public funds so far—turning early sceptics into quiet admirers of Bukele’s high-stakes strategy.
What many overlook is the fact that President Bukele’s Bitcoin playbook is pure dollar-cost averaging in action. This simple strategy is quietly turning some common people—who never opened a finance book or glanced at the Wall Street Journal—into millionaires, proving you don’t need a Wall Street pedigree to build serious wealth.
The Concept Behind The Magic
Dollar-cost averaging—called DCA in investment circles—works simply. Pick an amount. Pick a schedule. Then invest that amount on that schedule for a long time, regardless of the price.
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The strategy emerged from the 1929 Wall Street crash and the ensuing Great Depression, when advisors needed a way to coax Americans back into the markets. What makes it work is the distinction between buying a fixed number of financial assets versus spending a fixed amount of currency consistently over a long period of time.
To understand this, consider Maria, investing $300 monthly in an S&P 500 index fund. In January, the fund trades at $100 per share. Her $300 buys three shares. In February, markets panic, and the fund drops to $75. Her automatic $300 purchase now buys four shares. By March, the market had stabilised at $90, and she picked up 3.33 shares. After three months of investing $900, Maria owns 10.33 shares. Her average cost is $87.13 per share.
Her coworker, Tony, waited for the “right moment” with the same $900. He jumped in during March at $90 per share. He got exactly 10 shares.
In this scenario, Maria wins. She got more shares at a lower average cost without watching a single market forecast.
Most investors do the opposite—pile in when markets soar and panic when they crash. Buy high, sell low. DCA does the reverse: it helps buy more when prices crater and less when they surge.
The Strategy that Saylor Follows
Because of such genuine benefits, Michael Saylor, the CEO of MicroStrategy, didn’t just preach DCA. He bet his company on it.
In August 2020, Saylor’s company held over $500 million in cash and short-term investments, which were yielding no return due to the extremely low interest rates. Then he made a decision that shocked Wall Street: convert the treasury to Bitcoin using a systematic purchase plan.
The company started buying. Four years later, they have not stopped. As of December 8, 2025, MicroStrategy holds over 660,624 Bitcoins, worth $60 billion. It has raised billions through bonds and stock offerings for one purpose: to buy more Bitcoin. MicroStrategy continues to purchase Bitcoin during every dip, crash, and crypto winter.
Saylor’s thesis is straightforward: Bitcoin beats cash as a treasury asset. Holding dollars means watching purchasing power erode. Holding Bitcoin means owning a fixed supply in a world of unlimited money printing. While most investors panic-sell during crashes, Saylor’s strategy is simple: buy consistently, hold forever, and let time and conviction do the rest.
His disciplined DCA approach has seen his company buy BTC at an average price of about $74,700 — far below the current levels.
What’s more, since starting its Bitcoin strategy, Saylor’s company has seen its stock skyrocket more than 2,000%, turning a modest software firm into a $100 billion juggernaut fuelled by digital gold.
Corporate finance professors called it reckless gambling. Saylor calls it rational treasury management.
A Country Bets Its Treasury for Bitcoin
El Salvador, which also used DCA for Bitcoin purchases, faced the same criticism when it kicked off its bold Bitcoin plan by making it legal money in 2021. People protested on the streets at home, and experts around the world rolled their eyes or called it a disastrous idea. Even when President Bukele started buying 1 Bitcoin every day in 2022, many kept criticising it.
The IMF despised it. The hard-won $1.4 billion bailout deal in December 2024 required the country to stop using public funds for crypto. El Salvador signed the deal, cashed the cheque, and the next day bought 12 Bitcoins. “We’re not day traders. We’re building a strategic reserve like gold or foreign currency. The difference is we are doing it transparently,” said the country’s Finance Minister Alejandro Zelaya.
Where the Strategy Breaks Down
Despite its numerous advantages, trusting DCA blindly isn’t always the smartest play. Research by Vanguard, one of the world’s largest investment firms known for pioneering low-cost index funds, shows that from 1926 to 2011, a lump-sum investment strategy outperformed DCA roughly two-thirds of the time. If markets rise, getting all your money in immediately captures more gain than spreading purchases over time.
Moreover, the strategy demands discipline that most people cannot maintain. A legendary—though often debatable—anecdote from Fidelity Investments illustrates the point. When the firm reportedly analysed its best-performing client accounts, the winners were investors who had either passed away or simply forgotten that their portfolios existed. With no one left to panic-sell during market changes, these “hands-off” accounts compounded into superior returns, showing how emotions, not markets, are often the real enemy of wealth-building.
What’s more, even DCA cannot rescue wrong investment decisions. Take Japan’s Nikkei 225 index, for example. It hit its all-time high in December 1989, then dropped into a decades-long bearish sentiment. For anyone doing DCA for assets listed on the index over the following years, it took a staggering 35 years for the market to finally reach back to that peak. In real, inflation-adjusted terms, many investors endured decades of flat or negative returns, proving that steady buying only works if the underlying asset recovers fast.
The Uncomfortable Truth About Wall Street
The example of Japan’s Nikkei 225 index is a good example of why the financial industry does not promote DCA: it sees no profit in it. It cannot charge management fees on something anyone can set up in fifteen minutes. It can’t sell expensive funds when people buy indexes automatically. And it can’t generate commissions when investors hold indefinitely.
Wall Street makes money from various activities: trading, rebalancing, and propagating sophisticated strategies requiring expert management. DCA requires none of that. It is terrible for Wall Street businesses, but it is excellent for investors.
Vanguard founder Jack Bogle spent his career promoting this message. “The greatest enemy of a good plan is the dream of a perfect plan,” Bogle wrote in 2007. “For most investors, dollar-cost averaging into a low-cost index fund is the closest thing to perfect available.”
The strategy works by removing emotion. Fear and greed destroy more wealth than crashes. DCA eliminates both through mechanical execution.
It works by accepting reality: nobody can consistently predict short-term moves. Not professionals with Bloomberg terminals. And certainly not the retail investors.
DCA works because markets trend upward over long periods despite brutal short-term volatility. Consistent buying captures long-term gains while reducing the psychological impact of short-term noise.
And it works because compound returns plus time equals wealth.
El Salvador’s clerk buying Bitcoin each morning was not making sophisticated decisions. He was executing the same order repeatedly, trusting consistency. And $400 million in profits suggests that trust is well-placed.
The question was never whether DCA works. Decades of data from millions of retirement accounts provide a clear answer to this question. The true question is whether investors possess the discipline to continue investing even when their instincts tell them to stop. That’s where most fail. And those who succeed build wealth that changes everything.
