Basics of Dollar Cost Averaging Dollar-Cost Averaging Is a Popular Method of Investing for the Long Term

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Basics of Dollar Cost Averaging Dollar-cost averaging is a popular method of investing for the long term. If you’ve been burned before by buying high and selling low, you may want to consider putting your investments on cruise control with dollar-cost averaging. Dollar-cost averaging – the basic premise behind employer-sponsored savings plans like 401(k)s – is the practice of investing a set amount each month in a particular investment vehicle. As the share price of your investment fluctuates, so will the number of shares your set amount buys. Sometimes you’ll pay more and sometimes the stock or mutual fund will decrease in value, allowing you to purchase additional shares. By year-end 2015, Americans had $24.0 trillion invested in IRAs, employer-sponsored savings plans and annuities, according to the Investment Company Institute’s 2016 Investment Company Fact Book. With the vast and varied information available on investing, many Americans have chosen to stop chasing yesterday’s high returns. Using dollar-cost averaging can help them ride out the ups and downs of the market. Dollar cost averaging involves continuous investment in securities, regardless of fluctuating price levels. Investors should consider their ability to continue purchases through periods of low price levels or changing economic conditions. Dollar cost averaging does not ensure a profit and does not protect against a loss in a declining market. Dollar-cost averaging isn’t for everyone. Short-term investors and those concerned about market volatility won’t benefit from the slow and steady pace of dollar-cost averaging. Always meet with a financial professional before investing. For those who want to invest a consistent amount each month and potentially lessen the effects of market volatility, it may be an option. Written by Securities America for distribution by American Wealth Management. Securities America and its advisors do not provide tax advice. Please consult with your tax professional regarding your individual tax situation. .

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What Is Dollar Cost Averaging?
Massachusetts Deferred Compensation SMART Plan Office of State Treasurer and Receiver General EDUCATE What Is Dollar Cost Averaging? SAVE MONEY AND RETIRE TOMORROW Dollar cost averaging is a technique that allows you to regularly contribute money over time to help avoid timing risk (i.e., trying to pick just the right day when prices are low so you can buy more shares).1 • Dollar cost averaging is a simple, systematic investment approach in which you invest a fixed-dollar amount at regular intervals. With your payroll contribution, you are already taking advantage of dollar cost averaging. • With a fixed-dollar amount, you purchase more shares when prices are low, while you purchase fewer shares when prices are high. • Typically, your average cost per share will be lower than your average price per share. How It Works Example: Jennifer wants to invest a total of $2,400 in the market over four months. Month Amount Invested Price per Share Number of Shares Average Price per Share: Sum of Prices $114 January $600 $20 30 Number of Purchases / 4 February $600 $24 25 Average Price per Share $28.50 March $600 $30 20 Average Cost per Share: April $600 $40 15 Total Amount Invested $2,400 Total $2,400 $114 90 Number of Shares / 90 FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration does not represent the performance of any investment options. Average Cost per Share $26.67 How to Use It If you are currently regular paycheck contributions, then you are already taking advantage of this principle. Otherwise, log on to the website at www.mass-smart.com or call (877) 457-1900 to specify your dollar cost average setup date.
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Dollar Cost Averaging - the Role of Cognitive Error…………….Page 44
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Dollar Cost Averaging a Disciplined Approach to Long-Term Investing
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