A person’s library can often indicate their interests. A few of the books you’ll find on my bookshelf include The Richest Man in Babylon, Profit First, and Couple’s Guide to Financial Independence. I love personal finance.
I recently read about dollar-cost averaging (it is a common personal finance term) and I thought it was a great metaphor for learning anything new. I will use software engineering as an example seeing as I have one month until I graduate from Flatiron School.
What is Dollar-Cost Averaging?
It’s a financial term to describe a simple investing method.
Investopedia has a great explanation of dollar-cost averaging on their website.
Instead of investing one lump sum of money all at once, dollar-cost averaging means a set amount of money is invested consistently, over time (e.g. $50 monthly), regardless of share price fluctuation.
A 401K is a great example.
You don’t decide each month how much you’re going to save in your 401K. Typically you decide on a fixed amount or percentage of your monthly paycheck to automatically invest based on your long term goals. Once the amount is set, the investing begins. 🏁
In the example below, a fixed amount of $100 per month will be invested. In October, the $100 dollars is able to purchase 5 shares based on the $20 price per share. When November comes around, the $10 price per share purchases 10 shares!
The price per share will fluctuate month-to-month, week-to-week, moment-to-moment.
“The goal of dollar-cost averaging is to reduce the overall impact of volatility on the price of the target asset; as the price will likely vary each time one of the periodic investments is made, the investment is not as highly subject to volatility.”
Adam Hayes, Dollar-Cost-Averaging (DCA), Investopedia
Investing long term is about time in the market, not timing the market.
Compare Dollar-Cost Averaging to Learning Something New
When I decided to invest in a software engineering bootcamp I thought of it as learning a new language. The best way to learn a new language is to be fully immersed in the experience. A great way to learn Spanish is to spend 15 weeks in a Spanish speaking country.
During my Flatiron School bootcamp experience, I have felt varying levels of motivation and energy. The most important advice I received is to be consistent over time.
If I stick with learning software engineering for three years I will become significantly better at this skill. We were encouraged to keep taking a step forward when we felt confident about a concept or whether it made no sense at all.
Practice, practice, practice.
I don’t have to code all weekend if I’m feeling behind on a coding concept. Instead it is important to rest and spend an hour or more each day to keep my skills fresh.
Practice, practice, practice.
Instead of waiting until you feel the motivation to code, take time to code today and do it again tomorrow. Invest in yourself over time.
What would I learn about you based on your bookshelf?