Dollar Cost Averaging

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• Introduction to dollar cost averaging
• A simple example of dollar cost averaging
• The advantages of dollar cost averaging
• How to use dollar cost averaging

Introduction to dollar cost averaging

You're able to regularly save $100 per month.

In May, the units cost $1 each, so you're able to buy 100 units.
In June, the cost of the units falls to 95c, so you're able to buy 105 units.
In July, the cost of the units again falls, this time to 85c, so you're able to buy 118 units.
In August, the cost of the units rises to $1.05, so you're able to buy 95 units.

At the end of August, you own 418 units. The cost of the units is now $1.05, so your total investment is worth $439.

The cost of your 418 units over the four months was $400, so the average cost of each unit was 96c.

Your investment has increased from $400 to $439.