How to DCA - Correctly Average Stock Costs: A Beginner's Guide

Looking to build a sustainable savings system without timing the market? The DCA or Dollar-Cost Averaging method might be the answer you’re seeking. This technique helps beginner investors start with a small amount of capital and reduces the risk from price volatility.

What is (DCA) (Dollar-Cost Averaging)?

DCA stands for Dollar-Cost Averaging, a simple investment technique. The principle is to invest the same amount of money regularly, regardless of whether prices are high or low.

For example, if you decide to invest 3,000 THB every month in stocks, when prices are high, you’ll buy fewer shares, and when prices are low, you’ll buy more. This approach helps lower the average cost compared to making a single lump-sum purchase.

The benefit of DCA is that it fosters disciplined saving. Investors don’t need to worry about buying at the right or wrong time; just follow a clear savings plan and stick to it.

Advantages that make investors choose DCA

Low initial capital but real returns

No need to have millions of baht to start. You can begin with just 1,000-5,000 THB per month. Ideal for those who want their money to work harder than just sitting in a bank.

Reduces fear of buying at high prices

When stock prices soar, you’ll buy fewer shares; when prices drop, you’ll buy more. The price difference helps lower your average cost.

No need to constantly follow market news

This strategy is perfect for busy people. Investors don’t have to watch the stock board all day or worry about the perfect timing.

Real returns over time

The longer you invest, the lower your average cost. If stocks are in a long-term uptrend, you’ll realize profits with a clear mind.

Limitations to be aware of

Although DCA is safer, it doesn’t mean risk-free. If you choose stocks with no future prospects and prices keep falling, dollar-cost averaging can still result in losses.

Average cost is just an average — if stock prices keep rising, your average cost will approach the current price.

Does not reduce overall portfolio volatility — high-volatility stocks can still cause market pressure.

May not suit short-term traders — if you’re a short-term speculator aiming for quick profits, DCA might cause frustration from missing out on multiple up-and-down swings.

Real example of DCA over 12 months

Let’s look at a real example for better understanding. Suppose you invest 3,000 THB every month in a stock with fluctuating prices between 6 and 15 THB over 12 months.

From the table, the average cost per share is 9.67 THB. If you had bought all shares at once in month 12 with 36,000 THB, you’d get only 2,400 shares. But with DCA, you get 3,940 shares — a significant difference.

Which stocks are suitable for DCA?

Before investing with DCA, choose stocks with strong fundamentals. Good stocks should have:

Strong business fundamentals — companies with competitive advantages that can sustain long-term industry presence.

Growth plans — stocks with potential for expansion, not easily outdated.

Consistent profits — companies with steadily increasing profits, indicating good management.

Manageable debt levels — excessive debt can lead to future repayment issues.

Regular dividends — companies paying consistent dividends show stability and profitability.

6 popular DCA stocks for beginners

PTT - National Energy

PTT is Thailand’s major energy company, operating across exploration, production, nuclear, and distribution. Its stability makes it a common choice, with regular dividend returns.

CPALL - 7-Eleven

Operator of over 13,000 7-Eleven stores nationwide. Reliable rental income makes it suitable for long-term DCA.

SCC - Siam Cement Group

One of ASEAN’s largest conglomerates, involved in cement, chemicals, and packaging, with over 100 years of history. Known for stability and regular dividends.

INTUCH - Telecom Investment

Invests in mobile via AIS, as well as satellites and tech. Steady cash flow provides high dividends.

BBL - Bangkok Bank

Leading Thai bank with extensive network. Its strength and stability make it a safe investment choice.

CPN - Central Pattana

Major retail property developer with over 30 shopping centers and other real estate projects. Rental income makes it suitable for long-term investment.

Which broker should you choose?

Currently, many Thai brokers offer DCA services, each with different features:

SBI Thai Online — Minimum investment 1,000 THB, fee 0.075%, covers SET 100 stocks.

SCB Securities (SCBS) — Minimum 2,000 THB, options for monthly or weekly investments, fee 0.157% for online orders.

Phillip (Phillip) — Minimum 1,000 THB, choose from 36 recommended stocks, fee 0.257%, minimum 30 THB per round.

Kasikorn Securities (KS) — Minimum 5,000 THB, options for SET 100 or ETFs, fee 0.157-0.207%.

Nomura (Nomura) — Minimum 1,000 THB, invests in stable CNS stocks, fee 0.15-0.25%.

KTB Securities (KTBS) — Minimum 1,000 THB, invests in SET and mai stocks, fee 0.25%.

Bualuang Securities (Bualuang) — Minimum 5,000 THB, focuses on ETFs like BMSCITH, BSET100, fee 0.30%.

Maybank Kim Eng (Maybank) — Minimum 5,000 THB, invests in SET 50 and SET 100, fee 0.15%.

Krungsri (KSS) — Minimum 2,000 THB, invests monthly/weekly in SET 100 stocks.

Each broker has pros and cons. Choose based on your needs and budget.

Summary

The DCA or dollar-cost averaging method helps investors start with small capital, develop disciplined savings habits, and reduce fear of market timing. The key is to select stocks with good fundamentals, growth plans, and regular dividends. If you’re a beginner hesitant about how to start investing, DCA can be a great starting point, allowing you to learn investing while gradually accumulating assets.