Effort-Cost Averaging

Dollar-cost averaging is when you invest the same amount of money each month towards your goals, regardless of market performance. It’s a relatively guaranteed, low risk way to grow your investments over time, but critical to the concept is the disregard you must have for daily spikes and micro fluctuations, otherwise, when you see unsavory results you make panic moves and disrupt the long term strategy that you know will yield results. Every month, you continue the exact same effort despite what those results in the current moment are telling you because long term, you know you win.

Fitness is no different. When you overreact to micro fluctuations and negative variance; a few vacation pounds, a week off because of work – the worst thing you can do is panic, overhaul and shun the approach that’s been working. Seven day cleanses, extreme calorie cuts, total removal of an entire macronutrient, going to two classes per day. These are all overcorrections to market variance that is completely normal and expected.

Stay the course. Sound investing will always work.

-Dave