DOLLAR COST AVERAGING
Example One: Averaging in an Increasing Market Unit Price $16.00 $15.00 $14.00 $13.00 $12.00 $11.00 $10.00 1
2
3
4
5
6
7
8
9
10
11
Units Purchased 100
100 95
95
90
90
86
85
83
80
80 76
75
74
71
68
70 65 60
1
2
3
4
5
6
7
8
9
66
64
10 11 12
Invest $1000 a month for 1 year Units Purchased: 953 Total Cost: $12,000 Market Value: $14,771.50 $ Growth: $2,771.50 % Growth: 23%
12
Example Two: Averaging in a Down and then Up Market Unit Price $10.00 $9.00 $8.00 $7.00 $6.00 1
2
3
4
5
6
7
8
9
10
11
12
Units Purchased 142
145 133
135
133 125
125
125
117
117 115 105 95
111
111
105
105 100 1
2
3
4
5
6
7
8
9
10 11 12
Invest $1000 a month for 1 year Units Purchased: 1,424 Total Cost: $12,000 Market Value: $13,528 $ Growth: $1,528 % Growth: 13% (despite the final purchase price being lower than the original purchase price)
Example Three: Averaging in an Fluctuating Market Unit Price $16.00 $15.00 $14.00 $13.00 $12.00 $11.00 $10.00 $9.00 1
2
3
4
5
6
7
8
9
10
11
Units Purchased 105 100
105 100 95
95
90
90
83
85
86
80
76
80
75
71
74
70
66
65 60
1
2
3
4
5
6
7
8
9
64
10 11 12
Invest $1000 a month for 1 year Units Purchased: 990 Total Cost: $12,000 Market Value: $15,435.50 $ Growth: $3,345.00 % Growth: 28%
12