Dollar Cost Averaging

Dollar Cost Averaging

Dollar Cost Averaging (DCA) is believed by many economists to be the best accumulation strategy.  A DCA strategy can easily be fit into your monthly budget and is simple and effortless for the average investor.  It removes the need for you to time the market or to try and predict the optimum moment to invest in an investment.

Market timing is very difficult, even for the professionals.  With this strategy, an investor decides how much to invest on a monthly basis and then makes a regular deposit to their savings strategy according to their asset allocation.

By contributing on a monthly basis, you can ensure that you will not miss out on market upswings.  While it is true you may be at times buying stock that is at a higher price; the basis of this concept is that by investing regularly, the average cost of the investment over the long run tends to be lower.  For those investors who took advantage of this accumulation strategy this year during the COVID pandemic; many will find that they have yielded a much higher average per unit cost and will therefore realize a greater return over the next few years.

Christine’s Tip:

Dollar cost averaging has been a proven strategy for decades, no matter what has happened in the market.  Investors stand a much better chance of investing some of their money when the market is at its lowest point thereby increasing the growth, compounded interest and dividends, and ultimately making more on their overall portfolio.  Talk to your advisor about dollar cost averaging for your retirement portfolio.  I have many clients using this strategy and can say with great confidence that this method really does work and many investors who use it, when asked, would never invest any other way.