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Dollar cost averaging is a simple strategy investors can employ to smooth out market volatility.
It is almost impossible to time the market perfectly when investing. Not only is the risk that an investment is made at the “wrong time” but the greater risk is that in waiting for the "right time" you’re not invested in the market at all. You can offset the risk if the investment is made over a set period of time.
Suppose you make a one-off investment of $1200, at $10 per unit you are able to purchase 120 units.
To offset the risk of making a badly timed investment, you spread your investment over 12 investments of $100 per month. It does not matter whether or not prices are high or low, as you purchase more when prices are low and purchase less when prices are high.
In the long run, the costs average out and there is the potential for investment gain. This strategy does not guarantee an investment gain or higher returns, but it engages the time in the market philosophy of investment whilst dealing with the volatility of the market.
You can take advantage of dollar cost averaging by investing via a regular investment plan on your new or existing investments. Most fund managers will allow you to make minimum monthly investments of as little as $100 per month.
 | The Benefits of Regular Investing |
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| BlueChip20 | Set up a monthly contribution to BlueChip20 and benefit from dollar cost averaging. more info
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| Managed Funds | Start investing in managed funds with a regular monthly contribution. more info
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