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Copy of Dollar Cost Averaging
Transcript of Copy of Dollar Cost Averaging
price of security moves up and down. As prices of security
rise fewer units are bought and as prices fall more units are bought.
When using Dollar Cost Averaging A person would invest a fixed amount. EX:$33,000, when buying from the same stock at the first interval. Then a person would end up with 825 shares of stock at $40 a share. 1,320 shares at $25 each. When the two prices are added up you get 2145 shares and an average cost of $30.75. Advantages Investment brokers and other sales people argue that the DCA is the best way to get your return rates because you are buying more shares.
Disadvantages Investor are more likely to
buy in during more high phases
than low ones. Or the money that the investor is waiting to invest isn't earning a return. http://www.youtube.com/watch?v=3RgqdS5jEmU