Dollar cost averaging (or DCA) is a simple technique that allows you to invest large sums of money over a period of time.
For example, if you have $12,000, you don’t invest the lump sum right away but split if over let’s say 12 months.
This way, when prices are low, investors will automatically purchase more with $1,000 and when prices are high, he will purchase less. The goal is not to time the market to get the cheapest price, but to obtain the average price.
Dollar cost averaging is primarily used by long term investors who do not wish to time the market.
Regular Savings Plan
DCA is normally used in conjunction with regular savings plan offered by several banks and brokerages in Singapore.
These services automate the entire process for you. They have differing charges and also different restrictions on what you can and cannot buy.
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