Many of us already have a dollar cost averaging strategy in place without even realising it. Every time our employers pay superannuation guarantee contributions (SGC) directly into our superannuation funds and they are invested – we’re utilising dollar cost averaging.
A dollar cost averaging strategy can also work in reverse, when you take money out of a pension fund or investment on a regular basis, rather than as a lump sum.
Dollar-cost averaging takes the emotion out of investing because no matter what direction the market is going, you continue to invest. Investing regularly in a share or fund that continues to fall each and every month is not a wise move.
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