As we have mentioned before, starting your investments early would be much more beneficial to your financial journey. (***insert time = money blog) If you are the laissez-faire-type-of-person, you might need a survival guide for investors who do not like to actively manage their accounts.
Dollar cost averaging is a systematic investment method, where investors usually invest in a fixed amount for a fixed period, rather than pouring in a lump sum of capital all at once.
What’s good about dollar cost averaging?
- Encourage the habit of investing
Investing is a good habit which allows you to utilize your assets, which could possibly generate scrumptious returns. However, most of the investment amateurs are reluctant to invest regularly because they are too lazy or sometimes they were defeated by just a single loss in their investments.
As such, we definitely have to use dollar cost averaging to remind ourselves about investing in fixed amounts regularly, in order to achieve our financial goals.
- Minimise the impact brought by the market fluctuations
Let’s assume that you are chipping in $1,000 every month for investing. In times when the market is performing well, your capital of $1,000 could only be used to purchase a relatively small amount of financial products, vice versa.
If you are adopting dollar cost averaging method, it could ensure that the impact of short term price swings is being minimised or protected, regardless of the market movement. Thus, the average cost would be lower than the average price, which makes this method a safe and sound option for your investment.
So you maybe curious – where can you invest using dollar cost averaging? It surely is tiips! Apart from gold redemption through your daily purchases, we are also offering monthly investment options in the future. Download our app to invest in your style.