What does dollar-cost averaging mean?

Dollar-cost averaging (DCA) is an investment technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price.

_{source: https://www.investopedia.com/terms/d/dollarcostaveraging.asp}

Why is dollar-cost averaging a limiting term?

The term dollar-cost averaging implies that this investing technique is only available to people who hold and use dollars.

In fact, this investing technique can be used by all people who any of currency, including, but not limited to the:

• Japanese yen
• Russian ruble
• Indian rupie
• Indonesian rupiah
• European Union Euro
• South African Rand
• and the list goes on

So for the purpose of this article, I will use fixed-fiat-cost averaging (FFCA) instead of dollar-cost averaging. The concept is identical to dollar-cost averaging, but is not exclusive since any fiat currency can be substituted.

Basic Principles of Fixed-Fiat-Cost Averaging

FFCA focuses on:

• regular intervals - purchases are made at regular intervals (typically on a monthly basis)
• fixed amounts of fiat currency - the investor determines how much money he or she can invest in advance and commits to making investments at that level at each time interval.

FFCA does not focus on the share price of the investment being purchased. More shares are purchased when prices are low and fewer shares are purchased when prices are high.

The result is that the investor does not need to fear purchasing shares when the price is too high or even when to get in and out of the market. There is still a risk of losing money, but this investment strategy helps reduce the risk of investing a large lump sum at a single time.

How can you apply the FFCA investment strategy to Steem?

Fiat to Steem

1. Determine how much money you can afford to invest.
   Never investment money that you can't afford to lose. In this example, I will choose $20 a month.
2. Determine the day that you will invest on each month.
   In this example, I choose the 15th of each money.
3. Convert fiat money into cryptocurrency.
   I typically use Coinbase.com to convert from USD to Bitcoin, Litecoin, or Ethereum. If you use my affiliate link and then buy or sell over $100 of cryptocurrency, then we both earn $10 worth of Bitcoin.
4. Invest in Steem which can be used to power up:
   • Open your Steemit wallet
   • Click the upside down triangle next to your Steem total.
   • Click Buy.
     
   • Enter the appropriate information into Blocktrades and finalize the purchase.
     

IMPORTANT: There are fees associated with transactions on Coinbase.com and exchanges.

Steem Back Dollar (SDB) to Steem

1. Earn Steem Backed Dollars:
   You can earn SBD by writing quality blog posts if you set your rewards payout settings to 50%/50%.
   
2. Determine how much SBD you want to invest each month:
   If you need fiat money, SBD can be sold for USD or other currencies at an exchange. If possible, I would recommend using most of you SBD to buy Steem and then power up. I am long on Steem!
3. Convert SBD into Steem:
   • Open your Steemit wallet.
   • Click the upside down triangle next to your Steem Back Dollar total.
   • Click Market.
     
   • Enter the appropriate information into the Steemit Internal Market and finalize the purchase.
     

Your Turn

Let continue the conversation in the comments section.

1. Have you ever investing user the fixed-fiat-average cost technique?
2. Do you prefer to make large sum investment or smaller, more regular investments?
3. Have you every purchased Steem or Steem Backed Dollars from Block Trades?
4. Have you ever used Steem Backed Dollars to buy Steem on the Steemit Internal Exchange.

Thanks for stopping by!

Disclaimer: I am not a professional financial planner. The advice I provide is for your entertainment use only. By sure to investigate any opportunity thoroughly and consult your financial/legal advisers before making a new investment.

@sumatranate

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Image Source: https://pixabay.com/en/money-home-coin-investment-2724241/