In the first part of this series, I wanted to test the claim that dollar cost averaging (DCA) was an effective strategy for protecting your investments. Too often I’ve heard claims against investing within the media saying that if you had bought stocks (particularly) during “The Lost Decade” between 2000 and 2010, then you would have had a -23% return on your money. After crunching the numbers, we determined that dollar cost averaging would have beat a static investment in the S&P 500 and returned a -6.8% return instead of a -23%.

That’s great, but who wants a negative return?! Why didn’t we just hide our money under the mattress and do nothing?

Unfortunately, that may be true. But remember that when it comes to investing: Defense is just as important as offense. So even though we lost money, the point of our experiment was to see if dollar cost averaging would have helped protect our retirement money during the bad times (also called hedging).

Therefore, in this second part of the series, we’re going to add something new to the mix to further hedge our portfolios: Bonds. That’s right; we’re going to re-run the same dollar cost averaging example as before only this time adding a mixture of bonds to the equation. How do think we’ll do?

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