Dollar Cost Averaging Example

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I opened my Coinbase app and looked at the bitcoin price. At the time it was $4200. I had no idea if that was high or low. It was just a number. I noticed I could look at a chart and see how it had risen and fallen.

Still that wasn’t much help as I didn’t have any experience with that. So I asked myself, do I just make a purchase or wait to see what the price does. This may go through your head when you first start. I have a basic strategy that I found from doing research and it can help you take the first step.

Let’s say you have $500 to invest. This just happens to be what my sister is starting with and I gave her this same advice. In Coinbase you can buy bitcoin, ethereum, and litecoin. Eventually I recommend buying some of all three but for now we will concentrate on only bitcoin.

Go to coinbase, either the app or website. Since you have not made a purchase yet we are not going to pay attention to the price. We are just looking for a starting point.

We will be doing what is called Dollar Cost Averaging. This is where instead of making one big purchase, you make smaller ones spread out over time.

Make a purchase for $250 worth of bitcoin. Now set a day in the future to make your other purchase of $250. I recommend a few days to a week.

This will allow you to get two different prices of bitcoin. If the price goes down from your initial purchase great, you got to buy in at a lower price. If it went up fine, you already made a purchase at a lower price.

With this strategy you could do smaller amounts of your $500 spread over a longer amount of time. For example, $20 purchases spread out over 25 weeks. While this is possible I do not recommend it. I explain why in http://bitbetterhavemymoney.com/my-original-buying-plan/

 

Get to the Choppa

 

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