The most realistical way to get rich

A lot of economic awakening has spread over the course of the last years. Targeted digital marketing combined with a stellar decade for the stock market have spread awareness for economical education and pushed many people to trade in the stock exchange and the likes, thanks to online brokers.

A lot of YouTube channels and financial advisers nowadays teach people how to earn on the long term using index funds and dollar cost averaging.

And there’s nothing wrong with that. On the contrary, pushing people to set aside a little money each month to build wealth safely is a noble endeavor.

The only thing is that there are much better ways to take advantage of the annual stock market returns to get greater profits with no added risks, that are not talked about much, and with amazingly little information available on the internet.

The DCA is so recommended on the internet due to the fact that it works, and it’s simple, but there are more complex strategies, like the one that I’m going to talk about, that can reward us much more in the end.

I don’t want to claim to have found something that supposedly makes a lot of money out of nowhere. What I want to share is a smart, mathematical way of managing and rebalancing our portfolio, that’s not concerned with predicting the direction of the market, and that is almost risk-free.

To illustrate my point, I’m going to use the results of investing €500 monthly on the S&P500 (the SPY to be exact) for 10 years (in our case from 2006 to 2016) with a buy and hold and a DCA against the more complex strategy.

The following results are taken from this book: https://amzn.eu/d/aaqMXAI

The results show that buy and hold did slightly better than dollar cost averaging (94% vs 72%), but both percentages pale in comparison with the result of the more complex strategy: an astonishing 241% over the course of a decade, three times better than DCA with the same level of risk.

The way this strategy works is actually very simple and requires only basic math. It is called Dollar Value Averaging and was invented fairly recently by M. Edleson. It works as a natural evolution of dollar cost averaging, that has way greater returns and none of the cons…