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Growing Your Wealth Your Way

We are able to provide a wide variety of investment choices including mutual funds, ETFs, stocks, and bonds.

We are an independent investment service. The investment decisions we develop with you are not tied to any directive or incentive to promote specific products. We assist you to design a portfolio that aligns with your objectives.

Dollar-Cost Averaging – A Strategy that Works

Opportunity always accompanies a crisis. If you are investing on a monthly basis and have a secure cash flow throughout this pandemic, then consider temporarily increasing your contributions. It’s easy, all it takes is a phone call to authorize the change.

The tables below show why this is a powerful way to build wealth.

Market Falling

If you invest $100 each month when prices are falling, you buy more units/shares. In the example below, it may not have been emotionally rewarding to buy at $6.50 per unit (month 12) as compared to $10.00 per unit (month 1). For a long-term investor, there is a significant difference in growth on 15.38 shares compared to the 10.00 you received for your $100 in month 1.

Table and chart illustrating impact of dollar-cost averaging. When the market is falling more units/shares can be purchased at a lower price.

 

Market Rising

Table and chart illustrating impact of dollar-cost averaging. When the market is rising fewer units/shares are purchased at a higher price.

 

Market Fluctuating

Table and chart illustrating impact of dollar-cost averaging. When the market is fluctuating units/shares are purchased at different prices..

 

Side by Side Comparison

The comparison below demonstrates clearly that dollar-cost averaging is a successful strategy in all types of markets but the most beneficial is purchasing when prices are dropping.

The information in this commentary is for informational purposes only and not meant to be personalized investment advice. The content has been prepared by Jan Fraser, Fraser & Partners Investment Services of Aligned Capital Partners Inc. (ACPI) from sources believed to be accurate. The opinions expressed are those of the author and do not necessarily represent those of ACPI.

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