DOLLAR COST AVERAGING

It is a well known fact that putting your money into a savings vehicle at the beginning of the year is more fruitful than at the end. Likewise it is better to accumulate your savings monthly in advance than annually in arrears. There is one additional advantage to systematically monthly over annually.

 

It is called Dollar Cost Averaging.

Market values are constantly changing, one day they are up, another day they are down.  The chart illustrates the point for a $12,000 investment one made on January 1 and the other spread over four quarters of $3,000 each. the investment is made into a segregated fund.

 

 

Date

Unit Value

Units

FMV

A) January 1

$10.00

1,200

$12,000

B)    Jan 1

$10.00

300

$3,000

B)  April 1

$8.00

375

$3,000

B)   July 1

$9.00

333.33

$3,000

B)   Oct 1

$12.00

250

$3,000

A)   Dec 31

$11.50

1200

$13,800 (15%)

B)   Dec 31

$11.50

1258.33

$14,471(20.6%)


As you can see by spreading the investment over several months the growth is enhanced.

For a frank discussion to further explore this concept and strategy please get in touch.


  • No comments found
CottageCountry2.jpg Hamilton.jpg cottagecountry.jpg Yonge St.jpg Niagara vineyard.jpg vineyard2.jpg WindMill.jpg ROM1.jpg lightning.jpg Goose1.jpg Queens U 2.jpg Eaton's Center.jpg LondonSkyline.jpg Niagara falls.jpg Ukranian Church.jpg RoyalYork.jpg badlands.jpg Croatian Franciscan Centre.jpg Wolf Lake.jpg Halton Country.jpg Via_1.jpg Lake Muskoka.jpg CanadianRail.jpg Univerity college U of T, Toronto, ON.jpg Guelph U.jpg Pearson.jpg Rogers Center-football.jpg TorontoBeach.jpg parliament.jpg toronto harbour.jpg CFL TigerCat Cheerleaders, Hamilton, ON.jpg TorontoWaterFront.jpg Rogers Center 2.jpg Queens U.jpg Brock U.jpg escarpment.jpg HartHouse, TorontoON.jpg Hockey Hall of Fame, Toronto, ON.jpg Rogers Center 1.jpg Moose.jpg Western U.jpg Sunset1.jpg UnionStation.jpg York U.jpg Burlington.jpg