Tip # 5 on Saving, Spending, and Savoring Money

06Nov09

Wouldn’t it be nice if there was a simple formula for consistently buying more shares of stock at the lower prices and less shares of stock at the higher prices?

Oh, wait, there is!  It’s called dollar cost averaging.  The formula?  Invest the same dollar amount in the same investment over a regular period of time.  The most sophisticated investors use dollar cost averaging.  But so do the least.

Dollar cost averaging requires only three decisions:

1.  How much money would you like to invest?

2.  In what would you like to invest?

3.  How often would you like to invest?

A typical dollar cost averaging plan would be an investment of $100 a month in a stock mutual fund.  Over time, that $100 will automatically accrue more shares at the lower prices.

Simple.  Smart.

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