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Making Saving Easy & Affordable

“Dollar - Cost Averaging”

Many people believe that they need a large sum of money to start investing. Even if you don`t have that kind of money and looking for a disciplined saving strategy, perhaps dollar-cost averaging might be the right strategy for your retirement plans.

Dollar-cost averaging happens when you invest at regular and smaller amounts of money rather than putting in a large lump sum all at once. As the asset price fluctuates, your regular contribution buys different amounts of the asset.

“Would you rather keep the cash in hands or invest your money in the markets smartly, so your money performs better?”

– Kevin Press

Let’s assume an investor contributes $100 per month for two years. Take a look at the numbers to see how dollar-cost averaging evens out the highs and lows of investing in the market. In this hypothetical situation, the investor will make $411 on the contributions of $2,400 – a healthy 8.6 per cent annual return over two years*.

Average Unit Price : $ 17.25

Total Units Purchased : $ 140.55

Total Value of Units at the end of 2 years : $ 2,811

Total Dollar Amount Invested after 2 years:$2,400

Total Return to the Investor : $ 411

Important Tips on Dollar - Cost Averaging

Start Early

Starting early and making regular investments will help you save enough for a happy and free retirement. You will be able to start with small sums and have the financial security you need for your retirement.

Prepare for Market Ups and Downs

You will have a long enough time on the horizon before you need your money and nobody can call what`s going to happen in the market correctly. With dollar-cost averaging the price of your selected funds will dictate whether you buy a lot (when prices are low) or a little (when prices are high). Just focus on your retirement goals and continue investing for your future.

Top 3 Advantages of Dollar-Cost Averaging

No Need to
Time The Market

Reduces Risks
& Loses

Convenient &
Affordable

If you have limited resources or relying on paychecks for having funds available for investing, then dollar-cost averaging makes a lot of sense. It is better than waiting and trying to time the market.

It’s impossible to foresee the fluctuations in the market. Dollar-Cost Averaging helps you to minimize losses in bad markets and reduce the amount of risk you carry. With this strategy, you will simply smooth out the volatility of your investments and take the emotion out of investing.

You can easily set up your budget and start saving monthly, quarterly or semiannually for your retirement. You will also create a new habit and become disciplined in your saving and investing routine.

The bottom line is, dollar-cost averaging is typically one of the easiest and most effective ways to build wealth over time because you can start with basic things like directing a portion of your paycheck to go to a CPP or a group plan. This way you will be investing a set amount on a regular basis. This is actually an excellent way to get started and save for your retirement.

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