• TFC Financial

Dollar Cost Averaging 101



It’s easier to show how this works, than explain it. Here’s an example of investing $250 [A1] a month for 12 months into a hypothetical managed fund.


At the end of the investment period, $3,000 has been added to the portfolio, but because more units were purchased when the market was down, the investor has bought 165 more units than they would have if they had invested everything on day

1. At the end of the time the value of the investment stands at $3,496.56 ($1,165.52 x $3). This is a 16.6% return - even though the unit price has only come back to its starting point.

Dollar cost averaging doesn’t always provide the best outcome or generate a positive return. In a rising market, there will often be periods when it doesn’t pay off. In turbulent times, when markets are flat or declining, dollar cost averaging into a diversified managed fund may well be the sensible way to unearth those hidden bargains.

We hope this has been of interest to you but if you have any further questions please get in touch with us.

#DollarCostAveraging

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Toowoomba Financial Centre Pty Ltd ABN 88073088070, trading as TFC Financial is a corporate authorised representative of Charter Financial Planning Limited ABN 35 002 976 294 Australian Financial Services Licensee License number 234665. This article contains general advice only. You need to consider with your financial planner, your investment objectives, financial situation and your particular needs prior to making any strategy or product decision.

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December 4, 2018

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Toowoomba Financial Centre Pty Ltd ABN 88 073 088 070, trading as TFC Financial is a corporate authorised representative of Australian Financial Services Licensee 234665, Charter Financial Planning Limited ABN 35 002 976  This website contains general advice only. You need to consider with your financial planner, your investment objectives, financial situation and your particular needs prior to making any strategy or products decision.

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