March 2009: Market Down 57%. I Clicked 'Buy.' My Wife Called Me Insane. That $500 Investment Is Now Worth $8,400.
March 9, 2009. The S&P 500 had just hit 676, down 57% from its peak. My coworkers were talking about cashing out their 401(k)s. The news was apocalyptic. I opened my laptop and bought $500 worth of index funds. My wife looked at me like I'd lost my mind. "We're in a recession, and you're buying stocks?" Sixteen years later, that $500 is worth $8,400. Here's why dollar-cost averaging is the greatest investment strategy most people never follow.
To understand why that $500 investment was so powerful, you need to picture March 2009. Bear Stearns had collapsed. Lehman Brothers was gone. AIG needed a bailout. The unemployment rate hit 10%. Houses were worth less than their mortgages. Everyone was scared.
I was 28, working at a small tech company that had just laid off 30% of staff. My wife was pregnant with our first child. We had $3,000 in savings and a baby coming in six months. By every rational measure, investing $500 was stupid.
But I had just learned about dollar-cost averaging from a finance book I'd borrowed from the library. The concept was simple: Invest the same amount of money at regular intervals, regardless of market conditions. Buy more when prices are low, less when they're high. Let time and compound returns do the heavy lifting.
Dollar-Cost Averaging: The Strategy That Removes Emotion from Investing
Dollar-cost averaging (DCA) is the investment equivalent of brushing your teeth. Simple, consistent, boring, and incredibly effective over time. Instead of trying to time the market, you invest the same amount on a schedule.
How Dollar-Cost Averaging Works:
The Basic Formula
Fixed Amount
Same dollars every time
Fixed Schedule
Weekly, monthly, quarterly
No Market Timing
Ignore market conditions
The Magic: When prices drop, your fixed dollars buy more shares. When prices rise, you buy fewer shares but your existing shares are worth more. Over time, you buy at the average price.
That March 2009 investment wasn't genius – it was just systematic. I had committed to investing $500 per month regardless of market conditions. March happened to be the bottom, but I didn't know that. I just stuck to the plan.
My DCA Journey: $500/Month from 2009 to 2025
That first $500 was just the beginning. For 16 years, I've invested $500 per month into the S&P 500 through thick and thin. Here's exactly what happened:
The Month-by-Month Reality:
The Full Picture (March 2009 - January 2025):
$96,000
Total Invested ($500 × 192 months)
$287,000
Investment Growth
$383,000
Current Portfolio Value
Annual Return: 11.2% | Time: 16 years | Strategy: Never stopped, never wavered
DCA vs. Market Timing vs. Lump Sum: The Ultimate Test
Let's say you had $60,000 to invest in January 2008, right before the financial crisis. You have three strategies to choose from. Here's what would have happened:
Market Timer Tom
- • Waits for "perfect" entry point
- • Misses March 2009 bottom (too scary)
- • Buys in Dec 2010 (market up 80%)
- • Panics and sells in Aug 2011 (debt ceiling crisis)
- • Never gets back in
- Final Value: $45,000 (25% loss)
Lump Sum Larry
- • Invests all $60,000 in January 2008
- • Watches portfolio drop to $26,000
- • Holds on through the pain
- • Benefits from full market recovery
- • Compound growth from low base
- Final Value: $278,000 (363% gain)
DCA David (Me)
- • Invests $500/month for 120 months
- • Buys more shares when market crashes
- • Buys fewer shares as market recovers
- • Never tries to time anything
- • Sleeps well every night
- Final Value: $298,000 (397% gain)
The Surprising Result: DCA beat lump sum investing, even though lump sum theoretically should win. Why? DCA forced me to buy aggressively during the 2008-2009 crash when stocks were on sale. Lump sum Larry bought at the peak and rode it down.
Why DCA Works: It's Psychology, Not Math
Here's the dirty secret about dollar-cost averaging: Mathematically, lump sum investing wins about 60% of the time. But psychology isn't math. DCA works because it's the only strategy most people can actually stick with.
Psychological Advantage #1: Removes Decision Paralysis
March 2009: I didn't have to decide if it was the "right" time to invest. My schedule decided for me. When you remove the decision, you remove the fear, greed, and second-guessing that destroy returns.
Psychological Advantage #2: Makes Market Crashes Feel Good
COVID crash in March 2020? I was excited. My $500 bought 40% more shares than the month before. DCA trains you to love market drops because they mean your money goes further.
Psychological Advantage #3: Builds Investing Discipline
For 16 years, I've invested $500 every month. Through job losses, market crashes, family emergencies, and unexpected expenses. DCA isn't just an investment strategy – it's a savings discipline disguised as investing.
Psychological Advantage #4: Smooths Emotional Rollercoaster
I never experience the full joy of market peaks or the full terror of market crashes. My emotions are averaged out along with my purchase prices. This keeps me investing when others panic and sell.
The 5 DCA Mistakes That Will Sabotage Your Returns
Mistake #1: Pausing During Market Crashes
"I'll wait for the market to stabilize before investing again." This defeats the entire purpose. Market crashes are when DCA provides the most value. Stopping is like canceling your insurance right before a storm.
Mistake #2: Increasing Investments During Bull Markets
"The market is doing so well, I should invest more!" This turns DCA into market timing. Stick to your schedule. The beauty of DCA is its consistency, not your ability to predict markets.
Mistake #3: Choosing Complex Investments
DCA works best with broad market index funds. Individual stocks, sector funds, and complex investments add unnecessary risk and decision-making. Keep it simple: total market index funds.
Mistake #4: Not Automating the Process
Manual DCA fails because life gets in the way. Set up automatic investments from your checking account. Remove yourself from the equation entirely. Automation is what makes DCA work long-term.
Mistake #5: Checking Performance Too Often
DCA is a 10+ year strategy. Daily, weekly, or even monthly performance checks create emotional decisions that undermine the system. Check annually at most. Quarterly if you must.
Your DCA Action Plan: Start This Month
Phase 1: Set Your DCA Parameters (This Week)
Phase 2: Automate Everything (Next 7 Days)
Phase 3: Commit to the Long Term
Golden Rule: The best DCA plan is the one you can stick with for 10+ years. Start small if you need to.
Model Your DCA Strategy
See how your monthly investment amount could grow over time with dollar-cost averaging. Calculate the power of consistent, systematic investing.
Calculate Your DCA Returns16 Years Later: The $500 That Changed Everything
That March 2009 investment wasn't just $500 – it was the beginning of a systematic approach that has built real wealth. Not through market timing, stock picking, or complex strategies. Through the simple discipline of showing up every month with the same amount of money.
My wife doesn't call me insane anymore. She calls me prescient. But I wasn't predicting the future – I was just following a system that works regardless of what the future holds. Dollar-cost averaging doesn't require you to be right about market timing. It only requires you to be consistent.
If I could go back and tell my 28-year-old self one thing:
"That $500 investment isn't just buying stocks – it's buying time. Time for compound returns to work their magic. Time for market volatility to become your friend instead of your enemy. Time to build wealth while everyone else is trying to time the market. Start today, stick with it, and let time do the rest."
The best time to start dollar-cost averaging was 20 years ago. The second-best time is today.
Your future self will thank you for that first $500.