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How Dollar-Cost Averaging Takes The Guesswork Out Of Investing

Jacob Scott

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Dollar-cost averaging (DCA) getty

As you might guess, one of the most common investment questions we receive on our Financial Coaching Line is about when to buy and when to sell investments to maximize returns. My most common answer to that question is that if I knew precisely when to buy securities at the perfect price with perfect consistency, I would be answering that question from my private island. In all seriousness, the up and down nature of investing often causes investors to hit pause on executing their long-term investment plans, which can cause serious harm to their long-term results. Investment paralysis can cause you to miss out on the best returns in the market. If you are looking to buy and hold for the long run, there is a method of purchasing shares that can help you ride out the ups and downs of the market and potentially improve your returns over time: dollar-cost averaging.

Dollar-cost averaging is easy to implement

The beauty of dollar-cost averaging is its simplicity. All you do is invest the same amount of money in your desired investment on a consistent basis over time (say every two weeks or each month aka when you get paid). When the share price is high, the number of shares you will get for your investment dollars will be lower and when the share price goes down, you’ll get more shares for your money. You might already be using dollar-cost averaging. If you participate in your employer’s 401(k) or other retirement plan, the same amount of money is deducted from each paycheck and then invested per your selections.

Dollar-cost averaging works

Because the stock market goes through many ups and downs over time, the odds of you being able to predict or pinpoint the lows with any consistency are extremely slim. This makes it unlikely that waiting and then investing all your money at once will pay off over the long-term. But those fluctuations create the perfect conditions for dollar-cost averaging to work its magic.

An example of dollar-cost averaging leading to higher returns

Let’s say you’ve set up a program of investing $100 a month in an exchange-traded fund. The fund share price generally hovers around $10 so you typically get about 10 shares for your monthly investment. But one month the market experiences a downturn, and the share price drops to $5. Your $100 investment buys you 20 shares.

You now own more shares that will be worth more when the market returns to its usual level. In this example, dollar-cost averaging results in a 33% return for our investor. Not bad for someone who set up a simple investment plan and stuck to it.

Note: This is a hypothetical example and is not representative of any specific situation. Your results will vary.

Dollar-cost averaging is not for everybody

Of course, dollar-cost averaging can have its downside. Such a strategy does not assure a profit and does not protect against loss in declining markets. If you are an active trader with a significant conviction about the price of a stock or ETF, you probably have zero interest in allowing your purchase price to be picked at random. If you want to try something a little more active than traditional dollar-cost averaging, consider accelerating your purchases if you see a dip in the price of your desired investment. For instance, if you are dollar-cost averaging $10,000 into an investment over 10 months you can decide that if there is a significant reduction in the price of the security, say 15-20%, you can double your investment that month of the market dip.

Dollar-cost averaging helps change how you think about investing

When you are consistently investing every month, your mentality about the market and market news changes. A month or so ago, there was news about the market hitting all time highs. In a dollar-cost averaging plan, I know my buying power is automatically buying fewer shares.

At the writing of this post, the dominate market news is about a new virus variant and CEOs taking significant profits. Could we be headed for a market dip? If so, my dollar-cost averaging plan will be buying more shares while the market is down.

Investing does not have to be complicated

If you’re like most people though, you’ll probably prefer to make dollar-cost averaging something you don’t have to think about. Most investment companies give you the option to set up automatic transfers from your checking account directly into your investment account, making investing on your own just about as easy as accumulating a nest egg in a 401(k) plan. If you’re not already taking advantage of dollar-cost averaging, start now. As the old saying goes, time is money!

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‘Moon Knight’ Took Marvel in a Different Orbit, but It Didn’t Rise to the Occasion

Jacob Scott

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Before anyone writes that off as an anomaly, “Eternals” tackled a similar introduction of a dense mythology on the bigger screen, with equally mixed results. It’s a reminder that while film-goers have had more than a decade to get to know characters like Iron Man, Captain America and Thor, introducing some of these lesser-known heroes can pose a more formidable challenge beyond catering to the most ardent fans.
For Marvel, there are warning signs in that, since “Moon Knight” will be followed by several series based on second-tier characters, although the next two on the horizon, “Ms. Marvel” (which is due in June) and “She-Hulk,” at least have the benefit of sharing franchises and name recognition with existing Avengers.
Ultimately, “Moon Knight’s” murky storytelling appeared to squander its principal assets, which included the cool look of the character — a costume that was too seldom used — and the presence of Isaac, who possesses additional genre credentials via the “Star Wars” sequels.

Taking its time in peeling back the layers of the character’s complicated backstory, “Moon Knight” took a weird plunge into the Egyptian mythology behind it, in ways that became increasingly confounding and surreal.

By the time the protagonist’s two halves, Steven Grant and Marc Spector, wound up in a psychiatric hospital talking to an anthropomorphic hippo in the penultimate chapter, the question wasn’t so much being able to keep up with the story as whether bothering to do so was worth the effort.

The sixth and final episode brought the plot to a messy close, seeking to stop the goddess Ammit from proceeding to “purify the souls of Cairo, and then the world.” In the customary credit sequence, the producers capped that off by introducing a third personality, Jake Lockley, also rooted in the comics. While that seemingly spelled the end for the show’s villain (Ethan Hawke), the finish — giving the god Khonshu the protégé he sought — paved the way for further adventures should Marvel so choose.

That last twist might be cause for celebration in narrower confines of the Marvel fan universe, but “Moon Knight” too often felt like it was one long Easter-egg sequence, conspicuously preaching to that choir.

Granted, Marvel has made clear that Disney+ offers the chance to explore different kinds of stories, but “Moon Knight” feels at best like a quirky showcase for Isaac and at worst a failed experiment in terms of execution and tone.

That doesn’t mean this “Moon” won’t somehow rise again, if the closely held streaming data justifies it. But the promise that surrounded this property has faded, providing further evidence that even Marvel isn’t immune from setbacks as it moves into its next phase.

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Start-up Pony.ai says it’s the first self-driving company to get a taxi license in China

Jacob Scott

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Autonomous driving start-up Pony.ai can collect fares for robotaxi rides in parts of two major Chinese cities as of Sunday.

Pony.ai handout

BEIJING — Self-driving start-up Pony.ai announced Sunday it received a taxi license, the first of its kind in China.

The license allows Pony.ai to operate 100 self-driving cars as traditional taxis in the Nansha district of the southern city of Guangzhou, the company said.

The Chinese start-up, which is backed by Toyota, received approval from Beijing city late last year to charge fees to operate a commercial robotaxi business in a suburban district of the city. It is not the same as a taxi licence.

Baidu’s Apollo Go also received approval in the same Beijing district last year.

Pony.ai was valued at $8.5 billion in early March. The company said its Nansha taxi license required 24 months of autonomous driving testing in China and/or other countries, and no involvement in any active liability traffic accidents, among other factors.

The start-up said it plans to launch commercial robotaxi businesses in two other large Chinese cities next year. The company is already testing self-driving cars in those cities and in California. 

Robotaxis in China currently have a human driver present for safety.

— CNBC’s Arjun Kharpal contributed to this report.

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How to watch Timberwolves vs. Grizzlies: TV channel, NBA live stream info, start time

Jacob Scott

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Who’s Playing

Memphis @ Minnesota

Current Records: Memphis 2-1; Minnesota 1-2

What to Know

The Memphis Grizzlies’ road trip will continue as they head to Target Center at 10 p.m. ET this past Saturday to face off against the Minnesota Timberwolves. Memphis will be strutting in after a win while Minnesota will be stumbling in from a loss.

The Grizzlies are hoping for another victory. They beat the Timberwolves 104-95 this past Thursday. The victory came about thanks to a strong surge after the first quarter to overcome a 39-21 deficit. Memphis’ success was spearheaded by the efforts of power forward Brandon Clarke, who had 20 points in addition to eight rebounds, and shooting guard Desmond Bane, who shot 7-for-15 from beyond the arc and finished with 26 points and six boards.

Barring any buzzer beaters, Memphis is expected to win a tight contest. They might be worth taking a chance on against the spread as they are currently on a two-game streak of ATS wins.

Memphis’ win brought them up to 2-1 while the Timberwolves’ defeat pulled them down to a reciprocal 1-2. A couple offensive stats to keep in the back of your head while watching: The Grizzlies come into the game boasting the second most points per game in the league at 115.6. But Minnesota is even better: they rank first in the league when it comes to points per game, with 115.9 on average. Tune in for what’s sure to be a high-scoring contest.

How To Watch

When: Saturday at 10 p.m. ET Where: Target Center — Minneapolis, Minnesota TV: ESPN Online streaming: fuboTV (Try for free. Regional restrictions may apply.) Follow: CBS Sports App Ticket Cost: $76.96

Odds

The Grizzlies are a slight 2.5-point favorite against the Timberwolves, according to the latest NBA odds.

The oddsmakers had a good feel for the line for this one, as the game opened with the Grizzlies as a 3-point favorite.

Over/Under: -110

See NBA picks for every single game, including this one, from SportsLine’s advanced computer model. Get picks now.

Series History

Memphis have won 19 out of their last 28 games against Minnesota.

Apr 21, 2022 – Memphis 104 vs. Minnesota 95 Apr 19, 2022 – Memphis 124 vs. Minnesota 96 Apr 16, 2022 – Minnesota 130 vs. Memphis 117 Feb 24, 2022 – Minnesota 119 vs. Memphis 114 Jan 13, 2022 – Memphis 116 vs. Minnesota 108 Nov 20, 2021 – Minnesota 138 vs. Memphis 95 Nov 08, 2021 – Memphis 125 vs. Minnesota 118 May 05, 2021 – Memphis 139 vs. Minnesota 135 Apr 02, 2021 – Memphis 120 vs. Minnesota 108 Jan 13, 2021 – Memphis 118 vs. Minnesota 107 Jan 07, 2020 – Memphis 119 vs. Minnesota 112 Dec 01, 2019 – Memphis 115 vs. Minnesota 107 Nov 06, 2019 – Memphis 137 vs. Minnesota 121 Mar 23, 2019 – Minnesota 112 vs. Memphis 99 Feb 05, 2019 – Memphis 108 vs. Minnesota 106 Jan 30, 2019 – Minnesota 99 vs. Memphis 97 Nov 18, 2018 – Memphis 100 vs. Minnesota 87 Apr 09, 2018 – Minnesota 113 vs. Memphis 94 Mar 26, 2018 – Memphis 101 vs. Minnesota 93 Dec 04, 2017 – Memphis 95 vs. Minnesota 92 Feb 04, 2017 – Memphis 107 vs. Minnesota 99 Nov 19, 2016 – Memphis 93 vs. Minnesota 71 Nov 01, 2016 – Minnesota 116 vs. Memphis 80 Oct 26, 2016 – Memphis 102 vs. Minnesota 98 Mar 16, 2016 – Minnesota 114 vs. Memphis 108 Feb 19, 2016 – Memphis 109 vs. Minnesota 104 Jan 23, 2016 – Minnesota 106 vs. Memphis 101 Nov 15, 2015 – Memphis 114 vs. Minnesota 106

Injury Report for Minnesota

No Injury Information

Injury Report for Memphis

Dillon Brooks: Game-Time Decision (Foot) Santi Aldama: Out (Knee) Killian Tillie: Out (Knee)

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