Redditor Asks If Dollar Cost Averaging into Individual Stocks Makes Sense: 'I Was Thinking Of Adding Another $200 Bi-Weekly Into Some individual US Stocks'

Dollar cost averaging is a popular strategy among investors who want to increase their exposure to the stock market without having to time the market. It involves buying stocks at regular intervals regardless of the market price. 

It's a lot simpler if you apply this strategy to mutual funds and ETFs. Those funds offer diversified exposure to a wide range of stocks, but one Redditor is considering the dollar cost averaging method for individual stocks. 

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In an Investing Reddit post, an individual explains that they put $300 into their investment account bi-weekly. Now, the Redditor wants to put an extra $200 into the account bi-weekly and put that money into individual stocks. The Redditor mentioned a few blue-chip stocks and intends to follow that path for the next 20-40 years.

Before committing to it, the Redditor asked the community if dollar cost averaging into individual stocks is a good investment strategy. 

Buying ETFs Is a Lot Easier

The top comment offered a blunt assessment of the situation. "No! Just buy ETFs," the commenter stated. Buying ETFs is a lot simpler since you can follow benchmarks and themes instead of knowing about individual stocks. It takes less time to monitor ETFs since a fund manager does that for you.

While you can outperform the stock market if you buy individual stocks, it is riskier. The average investor is better off with ETFs.

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Put All of Your Money into the Stock Market

One commenter suggested that the best investment strategy is to put all of your money into the stock market when you are young. The idea behind this strategy is that investors get to enjoy more compounding growth in the long run. 

The commenter advocated for dollar cost averaging but didn't say if buying individual stocks was a good approach or a bad one. This comment is probably more geared toward the Redditor deciding to invest an additional $200 bi-weekly. That extra investment can compound over time.

The Redditor will endure some corrections as a stock investor. However, the original poster also mentioned having a 20-40 year time horizon. A lengthy time horizon makes it easier to realize profits from your investments when you are ready to sell them or pass them on to your heirs.

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Understand the Risks

While many commenters cautioned the Redditor to stick with ETFs, one of the commenters said that stock picking is okay if you know the risks. It's easier to recover from bad stock investments when you are younger. Furthermore, the investor is still putting some money into ETFs.

The commenter also mentions that the Redditor only listed reliable blue-chip stocks instead of high-flying growth stocks that can crash if the economy slows down. The Redditor doesn't seem like the type to go all-in on individual stocks, so a few individual picks can help balance out an ETF-focused portfolio.

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