DCA into growth and income ETFs

Question

Say I have portfolio with growth IVV and a dividend payer IOZ. IOZ’s price won’t grow as quickly because its profits are paid out as dividends.
Now when I use the pearler dollar cost averaging to buy in each month, the IOZ is usually lower in value so ends up being bought. So it seems I end up with many more units of IOZ than IVV. Does that feel right to you?

Answer

Good question.  And yes, that sounds right.  That’s just the math of how it’s gonna work most of the time.

While it might seem unusual, this will help you keep an even split between the two funds – whatever allocation you’ve decided.  If you take it in turns and buy each one every second month, then your IVV will grow faster and end up being a much bigger % of the portfolio and you move away from your original allocation that you decided on.

Hope that makes sense.

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David Horton

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