Tips to Grow Series -#3

The Dollar Cost Averaging (DCA) advantage
Financial markets are unpredictable with ups and downs. This can trigger a range of emotions, from joy and excitement when prices are up, to anxiety and panic when values head downward.

There are some investors who get caught up in the fear of missing out. They try and buy when a fund is doing well. And then there’s the nervous investor who, fearing the worst, sells a fund when the price drops.

In both market scenarios, investors are making quick decisions that could seriously affect an investment portfolio. But a DCA approach can help take emotions out of the equation.

Here’s some info to think about:
Start a systematic payment. By adding the same amount of money and investing on a regular schedule, regardless of market fluctuations, to buy funds. ( i.e. Starting a PAC to add $100 / month on the 15th)
When prices are high, this regular, recurring amount buys fewer units.
When prices are low, that same amount buys more units.

Depending on the average purchase price per unit over a given period, you may actually end up paying less per unit over the long run – therefore acquiring more units than if you had made a lump-sum purchase.

Most importantly, you’re investing regularly without being affected by the emotional highs and lows of market volatility.

Starting a systematic investment strategy has benefits. Now, instead of trying to time the market and hoping to buy when prices are low, let the law of averages and the DCA approach work in your favor.

Schedule a meeting with your advisor to review your investment goals and discuss whether DCA makes sense for you.