Historical Best Day of Month To Invest or Dollar Cost Average in the S&P 500 from 1950 to 2007

Many people have adopted a Dollar Cost Averaging Strategy of regularly investing in a mutual fund, such as an S&P 500 Index Fund. Often, brokers could give the user an option when they automatically invest the money. Investors could choose which day of the month they can dollar cost average.

Will an investors choice of day to invest on a regular basis affect overall return?



In the Chart Above, we have averaged the S&P 500 Closing Average from 1950 to August 2007 given a particular day of month.

We notice that the 19th of the month has the lowest S&P 500 average, suggesting that the 19th of the month during this 1950 to 2007 period is the best day of the month to dollar cost average. The 4th and 11th are the next runners up.

The worst days to invest are the 22nd, followed by the 7th, 8th, 31st, and 20th.

More Data

Day of Month and S&P Average Close:

1. 1 =427.79
   
2. 2 =423.92
   
3. 3 =425.97
   
4. 4 =417.92
   
5. 5 =425.40
   
6. 6 =423.93
   
7. 7 =429.16
   
8. 8 =428.80
   
9. 9 =425.51
   
10. 10 =421.28
    
11. 11 =418.35
    
12. 12 =425.22
    
13. 13 =423.64
    
14. 14 =422.36
    
15. 15 =421.07
    
16. 16 =425.35
    
17. 17 =420.41
    
18. 18 =419.70
    
19. 19 =416.94
    
20. 20 =428.42
    
21. 21 =422.16
    
22. 22 =433.34
    
23. 23 =425.31
    
24. 24 =425.00
    
25. 25 =419.48
    
26. 26 =424.77
    
27. 27 =425.30
    
28. 28 =423.34
    
29. 29 =418.86
    
30. 30 =427.28
    
31. 31 =428.42
    

Data Ordered by Average S&P 500 Close

Day of Month S&P Close:

1. 19 =416.94
   
2. 4 =417.92
   
3. 11 =418.35
   
4. 29 =418.86
   
5. 25 =419.48
   
6. 18 =419.70
   
7. 17 =420.41
   
8. 15 =421.07
   
9. 10 =421.28
   
10. 21 =422.16
    
11. 14 =422.36
    
12. 28 =423.34
    
13. 13 =423.64
    
14. 2 =423.92
    
15. 6 =423.93
    
16. 26 =424.77
    
17. 24 =425.00
    
18. 12 =425.22
    
19. 27 =425.30
    
20. 23 =425.31
    
21. 16 =425.35
    
22. 5 =425.40
    
23. 9 =425.51
    
24. 3 =425.97
    
25. 30 =427.28
    
26. 1 =427.79
    
27. 20 =428.42
    
28. 31 =428.42
    
29. 8 =428.80
    
30. 7 =429.16
    
31. 22 =433.34
    

Previous Look at Return by Day of the Month

Kiplinger Article on best Day of Month to Invest

The Average Method

The Averaging Method above is only an approximation. We do realize that S&P 500 index values that have a high value overshadows the days when the S&P 500 had much lower values.

Stock Performance By Day of the Month

Is there any stock market pattern based on the day of the month?

Some people speculate that towards the end of the month, money managers pile money into stocks at the end of the month to anticipate 401k and savings money coming in.

To test this theory, Kevin Haggerty and TradingMarkets.com researched this.

What they did is choose stocks above the 200 day moving average from January 1995 to September 2006, and back-test if the stocks were held for five days. Seven million trades later, those at TradingMarkets.com showed that yes, stocks above the 200 day moving average and held for five days towards the end of the month (23rd to 30th) have performed very well. Stocks above 200 day moving average held for 5 days during the beginning of the month did not do as well (3rd through 8th of the month).

This is a very interesting result, indeed. Money managers do appear to want to purchase stocks towards the end of the month. By the time the beginning of the month comes, those money managers have already spent their investment money.

Best Day of Month to Dollar Cost Average?