What is Dollar Cost Averaging (and Value Averaging)?
Taking the definition from investopedia.com (which I feel is the easiest and best one to understand), “Dollar-cost averaging refers to the practice of dividing an investment of an equity up into multiple smaller investments of equal amounts, spaced out over regular intervals.“ By putting this into practice, I invest a fixed amount of money monthly (e.g. I set aside $1000/mth after receiving my salary) INSTEAD of putting a one-time lump sum of money at the start of the investment. (e.g. a one off $50,000)...Dollar Cost Average, or DCA for short. Value Average, or VA for short.
One of the first few investment concepts you NEED to understand and know when you start off your investment journey! If you’re still clueless on what DCA and VA really are, here’s a simple crash course on these investment strategies and benefits, before we delve into my personal DCA & VA strategies.