I bought stock everyday for a year | #16
My experiment with averaging S&P 500 for a year
If you ever wanted to know what happens if you invest in SPY 0.00%↑ or VOO 0.00%↑ for an entire year, I have an answer for you. Yeah, I am that crazy one who experiments like this. Would it have been easier to backtest it with past data? Hell yes, it would have been. But, would I have lived the journey, no.
This experiment started with a reading that says if you invest $15 per day from the birth of your children to when they turn 18, they will have a net worth of around $200,000. I thought why not give my future children a head start.
I started investing in SPY 0.00%↑ and later changed to VOO 0.00%↑ in July of last year. I have been trying to buy as regularly as I can. Now, since, one year of buying the SP500 index fund is completed, I would love to see and present my findings.
Overview
🤝 Trades
😎 Performance
🔮 Future
🤝 Trades
I have made a total of 222 trades in the last 1 year, ranging from $5 to $750. I had 221 buys and 1 sale of SPY 0.00%↑ to VOO 0.00%↑. I have managed to add a sum of $4,578.42. I averaged each share at $385.79 and was able to collect 11.86764 shares of VOO 0.00%↑ at last. Here is a month-by-month purchase chart.
The biggest purchase that I made was in April 2022 with $814.69 and the smallest purchase that I ever made was in July 2021. This is how all the trades look in the trade chart.
😎 Performance
Talking about performance, as expected, DCA works better in the market downturn and I was lucky enough to get the market downturn in the first 6 months of 2022. Overall, I am down 7.98% down and SP500 is 13.55% down. Both of the performances are moving along in the same shape.
Let’s also explore the performance during a market downturn and market upturn, which luckily we got to experience during the year of the experiment.
🔼 Market upturn: During the market upturn SP500 seems to have better performance (as expected). It is because you will be increasing the average cost, which impacts percentage gains. From July to January 14th, the upturn lasted. DCA approach yielded a gain of 2.09% while SP500 had a gain of 5.53% with a difference of 3.44%. My average price of the purchase was $455.03.
🔽 Market downturn: During the downturn though, the story was different. As SP500 was down more than 20%, I was buying constantly bought and brought down the average price from $455 to $385. Hence, I managed to have a market-beating performance. I was down 9.76% while SP500 was down 13.55%.
🔮 Future
As this experiment started by reading the article about investing $15 per day from your child’s birth to when they turn 18, they will have $200,000 as shown in the image below.
I want to continue doing it as much as I can and as regularly as I can. Also, with the future looking like a downtrend will last longer than expected, it might be good for the overall performance too. Let’s see next year, what this experiment will result in.
The takeaway from this post:
DCA is a useful tool, especially during a market downturn
DCA is an example of drops collectively make an ocean
I bought stock everyday for a year | #16
Baller alert 🚨😎