good short article on Dollar cost averaging

Nigel Ward · 9th Dec, 2009

Sometimes being average is okay...

Smart Investing with Robin Bowerman | Financial News & Commentary | Vanguard Investments Australia

That is the secret to dollar cost averaging – the fact you are buying investment assets at lower prices if markets fall. Critics of the approach point out correctly that sharemarkets rise more often than they fall so that in growth markets you are actually buying assets at higher prices so the lump sum investor will be better off in long-run growth markets.

That is true but it perhaps doesn’t lend enough weight to the behavioural aspect of investing – and in particular the risk side of the equation. There is also the practical consideration – not everyone has the financial capacity to make lump sum investments but can save smaller amounts regularly.
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Investing decisions are a series of trade-offs and dollar cost averaging is no different. You are trading off some potential gain for lower market timing risk. Investors who used a dollar cost averaging approach reaped the benefits of two forms of diversification – they spread their investments over a wide range of asset classes and diversified over time periods as well.
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Tropo · 9th Dec, 2009

Dollar Cost Averaging Myth.
Michael James on Money: Dollar-Cost Averaging Myths

The Pros and Cons of Dollar-Cost Averaging
The Pros and Cons of Dollar-Cost Averaging | Wise Bread

Dollar Cost Averaging Will Not Protect You
The truth is, the financial services industry cares about your money only because it takes commissions and fees whether it makes you any money or not.
It perpetuates the Three Myths of Investing and extols the virtues of dollar cost averaging so you and I will give managers our money. The last thing they want is for you to invest successfully on your own. They want you to believe you'll lose your money if you do this yourself.
They're hoping your fear of loss will compel you to keep giving them your money in spite of the likelihood they'll be less effective than you are in reaping a high return.
more ... Dollar Cost Averaging Will Not Protect You : Rule #1

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good short article on Dollar cost averaging

Nigel Ward Well-Known Member

Tropo Well-Known Member

Log in or Sign up

good short article on Dollar cost averaging

Nigel Ward Well-Known Member

Tropo Well-Known Member

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