To Kevin M. Warsh, the Federal Reserve’s more than $6 trillion portfolio of government bonds and mortgage-backed securities is emblematic of everything that has gone wrong at the institution he hopes to lead.
The Fed’s decision to expand its portfolio by so much and so quickly since the 2008 global financial crisis has stoked inflation, worsened inequality and distorted the process of how financial assets are priced, according to Mr. Warsh, who is awaiting confirmation to become the next chair. The growing size of the investments on its balance sheet has jeopardized the Fed’s own independence by treading into territory far outside its congressional mandate, he believes. And it has made Wall Street overly reliant on the Fed, creating an unhealthy expectation that the central bank will always be ready to ride to the rescue.
Mr. Warsh’s plan to rectify this appears, on the surface, relatively straightforward. He wants the Fed to have a smaller footprint in financial markets and for there to be closer coordination with the Treasury Department on what the Fed holds in its portfolio and what the government issues in terms of debt to fund itself. Mr. Warsh has argued that reducing the central bank’s holdings will give officials space to lower interest rates, something President Trump has long desired. The rationale is that longer-term rates are likely to rise as the balance sheet shrinks, which then could be offset by lowering short-term rates.
Achieving all of this will be anything but straightforward, however. It will take careful planning and a significant amount of time in order to avoid creating damaging volatility.
In the world of investing, there is a constant temptation to find the “perfect” moment to buy. We wait for a market dip, obsess over headlines, and try to outsmart millions of other investors. But for the vast majority of us, the secret to long-term wealth isn’t timing the market—it’s time in the market.
This is where Dollar-Cost Averaging (DCA) comes in. It is one of the simplest, most effective strategies for building a portfolio without the stress of volatility.
What is Dollar-Cost Averaging?
Dollar-cost averaging is the practice of investing a fixed amount of money at regular intervals—regardless of the price. Whether the market is up, down, or sideways, you stick to the plan.
Because you are investing a set dollar amount (say, $200 every two weeks), you naturally buy more shares when prices are low and fewer shares when prices are high. Over time, this lowers your “average cost per share,” smoothing out the bumps of a volatile market.
The Power of “Set It and Forget It”
The real magic happens when you pair DCA with automatic contributions. By setting up a recurring transfer from your paycheck or bank account to your brokerage, you turn investing into a passive habit rather than an emotional decision.
Here is why regular weekly or bi-weekly contributions are so powerful:
It Removes Emotion: Market crashes are scary. When prices plummet, our instinct is to run. However, if your investment is automated, you continue buying during the “sale,” which is exactly when the biggest long-term gains are made.
It Fits Your Life: Most people earn money on a schedule (like a bi-weekly paycheck). Matching your investment schedule to your income stream ensures you pay yourself first before you have the chance to spend that money elsewhere.
The Math of Compounding: By investing every two weeks instead of waiting for a lump sum at the end of the year, your money starts working for you sooner. Those extra months of dividends and growth add up significantly over decades.
A Focus on the Long Term
DCA is not a “get rich quick” scheme. It is a marathon runner’s strategy. In the short term, the market will fluctuate, and some weeks your “automatic buy” might feel like it’s losing value.
But when you zoom out to a 10, 20, or 30-year horizon, those short-term fluctuations become mere noise. Historically, the stock market has trended upward over long periods. By consistently adding fuel to your investment engine every single week, you are positioning yourself to capture that upward trajectory with disciplined precision.
You don’t need a massive windfall or a degree in finance to build a secure future. You just need a plan and the discipline to stick to it. By automating your investments and embracing dollar-cost averaging, you stop being a victim of market swings and start becoming a master of your own financial growth.
Start small, stay consistent, and let time do the heavy lifting.
