The Best Investment Hack Every Investor Should Know

An investment hack doesn’t have to be risky, tricky, or any of those scary ideas. In fact, it can be as simple as consistency.

| More on:
Middle aged man drinks coffee

Source: Getty Images

When it comes to investing, everyone loves a good hack — something simple, reliable, and effective that can make navigating the stock market easier. While many hacks may sound complicated or risky, some are surprisingly straightforward and built to minimize risk. These gems of the investment world offer consistent rewards without demanding constant monitoring or precise timing. One of the best, time-tested hacks is dollar-cost averaging (DCA) — a strategy that’s accessible to every type of investor and designed to make investing both manageable and rewarding over the long run.

Dollar-cost averaging

DCA is a simple yet powerful approach where you invest a fixed amount of money at regular intervals, regardless of the asset’s price. This might seem too straightforward, but it’s this simplicity that makes it so effective. You don’t need to worry about buying at the perfect time or checking your portfolio daily. Instead, DCA takes the guesswork out of investing by helping you benefit from fluctuations over time. As a result, you can steadily build wealth without stressing over market highs and lows.

One reason DCA is so effective is that it naturally helps you avoid the trap of trying to “time the market.” When prices drop, you end up buying more shares for the same amount, and when prices rise, you buy fewer. This effect is often called “smoothing out” your cost basis, as it lowers the average price you pay over time. For investors who want steady growth without making big moves in the market, DCA offers a clear advantage.

A stock to consider

Power Corporation of Canada (TSX:POW) is an excellent candidate for a DCA strategy. POW’s recent earnings have been impressive, with quarterly earnings growth of 44.6% year over year and revenue growth of 11.5% for the most recent quarter. For investors using DCA, POW’s stability and growth outlook make it a strong foundation in a portfolio.

POW also pays a reliable dividend, making it appealing to investors who value income as part of their strategy. With a forward annual dividend yield of 4.84%, POW provides a steady stream of income. This is excellent for reinvesting back into the stock using DCA. The reinvestment can further compound your returns, especially in a stock with a manageable payout ratio of around 49.53%, indicating that the dividend is sustainable.

Keep it stable

For DCA investors, stability is key, and POW’s low beta of 1.09 points to lower volatility compared to the broader market. This reduces the likelihood of sharp fluctuations in value, allowing you to invest confidently over time without major surprises. POW is a company with a diversified portfolio across sectors like insurance, retirement, wealth management, and sustainable investing. Therefore, POW has a stable foundation that aligns well with the objectives of long-term DCA investors.

Additionally, POW’s management effectiveness metrics, such as a return on equity (ROE) of 11.29%, reflect strong leadership that maximizes shareholder value. This efficiency is a solid plus for DCA investors, as it suggests that the company is consistently working to deliver returns on your investment.

Bottom line

DCA is a simple yet powerful investment strategy that every investor should consider. By spreading your investments out over time, you can avoid the pitfalls of market timing and enjoy a smoother path to building wealth. With its stable financial performance, solid dividend yield, and forward-thinking approach to sustainable investments, POW offers an excellent foundation for a DCA strategy. Whether you’re new to investing or a seasoned pro, consistently investing in POW can help you build a portfolio with both stability and growth potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »

bulb idea thinking
Stocks for Beginners

2 Stocks That Could Help You Get Richer in 2025

It’s time to prepare for 2025 before you leave for the holidays. Here are two stocks that could make you richer…

Read more »

Investor reading the newspaper
Stocks for Beginners

A Better Post-Earnings Buy: Restaurant Brands or Lightspeed?

These two retail stocks have come out with earnings, but which is the clear long-term winner for investors?

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

3 Everyday CRA Red Flags Investors Should Really Know

The CRA can be a blessing and a curse, but if you make sure to follow the rules and not…

Read more »

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Canadian National Railway Stock is on Sale: Why Now is the Time to Invest

CNR stock has long been a top stock, with a solid position in a railway duopoly. But right now is…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

This 7.9% Dividend Stock Pays Cash Every Month

We all want dividends, and having them come out monthly is ideal! But this might be a strong choice for…

Read more »

data analyze research
Stocks for Beginners

The Best TSX Stocks for Canadians to Buy With $700 on Hand

These TSX stocks may not cost much but can provide you with stability as well as growth like no other…

Read more »