The Ibovespa just registered its 14th all-time record in 2026, surpassing 192,201 points on April 8. It is the kind of headline that makes many investors hesitate: "Did I already miss the best entry point?"
That question is understandable. But the historical evidence suggests that, for the vast majority of investors, it is the wrong question. The more relevant question is not when to enter, but how to structure entry to minimize timing risk.
The strategy that answers that question has a name: dollar-cost averaging (DCA) — known in Brazil as aportes regulares.
The Problem with Timing
Perfect timing is impossible to practice consistently — even for professionals with access to data, models, and technology. But the cost of getting timing wrong is enormous.
A classic analysis of the US market shows that missing the 10 best trading days in a decade can reduce an investor's total return by more than 50% compared to someone who stayed fully invested. Those 10 exceptional up-days frequently occur immediately after sharp declines — exactly when the frightened investor has already exited the market.
In the Brazilian context, the same principle applies. BOVA11 — the ETF that replicates the Ibovespa — has been a useful lens for this exercise. Investors who contributed monthly to BOVA11 over the past 5 years, regardless of market oscillations, accumulated returns superior to those who tried to buy dips and sell peaks.
| Strategy | Hypothetical 5-year return | Complexity |
|---|---|---|
| Regular monthly contributions | Market average (average price) | Low |
| Buy and hold (lump sum) | High (if timing is perfect) | High |
| Timing attempts | Generally below market | Very high |
Hypothetical values for illustrative purposes. Past returns do not guarantee future results.
How It Works in Practice
The mechanics of DCA are simple:
- Set a fixed amount to invest periodically (weekly, bi-weekly, or monthly)
- The investment occurs regardless of the asset's price on that date
- When the asset is expensive, the fixed amount buys fewer units; when it is cheap, it buys more
- Over time, the average cost per unit tends to be below the period's average price
The result is an automatically adjusted average purchase price over time. It is not the strategy that guarantees the best absolute price — but it systematically eliminates the risk of investing everything at the worst possible moment.
The Current Moment and Small Caps
With the Ibovespa at current levels, one specific opportunity deserves attention: small caps.
While the Ibovespa renewed all-time highs driven primarily by large companies (Petrobras, Vale, banks), the small-cap index (SMLL) still trades at a discount of approximately 33% relative to its historical peaks. This means a portion of the Brazilian market remains in attractively valued territory, even as bluechips set records.
For the investor making regular contributions to a small-cap ETF (such as SMALL11), the DCA strategy offers an interesting combination: systematic entry + assets with higher relative appreciation potential.
Regular Contributions vs. Lump Sum
The question of whether to invest everything at once (lump sum) or in installments (DCA) has been extensively studied. Academic research suggests that in markets with long-term upward trends, the lump-sum investment tends to outperform DCA in approximately two-thirds of cases — simply because the money is invested for longer.
However, DCA has two practical advantages that theory does not fully capture:
Behavioral: most investors cannot sustain a lump-sum investment after an immediate 20% decline. DCA reduces the psychological impact of immediate losses and increases the probability that the investor will maintain the strategy over the long term.
Liquidity: few investors have the full amount available to invest at once. DCA allows building positions progressively, from regular cash flow.
Risks of Regular Contributions That Need to Be Acknowledged
The strategy is not perfect — none are:
- Does not protect against prolonged downtrends: in structurally declining markets (like Brazil between 2013 and 2016), DCA means buying at every level as prices fall.
- Transaction costs: very small or very frequent contributions can dilute returns with brokerage fees and spreads.
- Risk of the chosen asset: DCA into a poor asset guarantees an average cost of a poor asset. The choice of instrument matters.
Structure Matters as Much as Strategy
Deciding how to invest (DCA or lump sum) is important. But deciding what to buy — the allocation between fixed income, domestic stocks, international stocks, real estate funds, and crypto — is equally relevant and often more complex.
With the Ibovespa above 192,000 points, the current environment requires investors to think in terms of diversification — and regular contributions across different asset classes can be an efficient way to build exposure without concentrating all resources at a single entry point.
At Royal Binary, founded by Sidnei Oliveira, the team executes more than 340 operations per month, with disciplined risk management that goes beyond the buy-and-hold approach. Want to understand how it works? Explore the platform.