How You Can Use Dollar Cost Averaging to Invest in Shares to Build Your Wealth and Set Yourself up for an Early Retirement ...

VIDEO TRANSCRIPT

In this video were going to look at how you can use Dollar Cost Averaging to invest in shares to build your wealth and set yourself up for an early retirement.  Hey , it’s NT here from Tolevsky partners where we help business owners and professionals, build their business, minimise their tax and grow their wealth. Dollar cost averaging is a buying strategy that stands in complete opposition to the active trading strategy of entering and exiting the market to catch its highs and lows. It involves investing a fixed amount in the share market at regular fixed intervals. A typical example would be investing, say $500 in the share market on the first day of every month. Assuming you can afford it , the logic behind this strategy is pretty simple .Firstly it is a disciplined investment regime, secondly, it acts to average out the cost of the shares you buy even though the value of the underlying assets and hence the share price have fluctuated. This process frees you up from having to worry about getting your market timing right. How does it do this? Well, when the market is declining your money buys you more shares than under normal trading conditions, and when the market is climbing it buys you less. You just keep on buying regardless of the state of the market and effectively build your share portfolio at an average market price. This averaging process ultimately means you might not get any bargains, but you should not pay too much for your shares either. You simply keep adding to your share portfolio come rain hail or shine. The easiest way and most affordable way of putting this get-rich slow technique into effect is by contributing regularly towards a professionally managed share fund or some other type of manage fund. Not only are the minimum ongoing investment sizes much smaller than the minimum size of a direct investment into shares but a managed fund takes the effort out of trying to decide which shares to buy. For example, many of our clients use indexed funds to invest in shares because it enables them to gain exposure to an index. An indexed fund is simply a managed fund that invests in an index for example the ASX 300. The fund allows you to get to diversification across a broad range of shares without having to worry about what to buy or sell. It takes out all the emotion. Plus with Australian Indexed funds you get the added benefit of imputation tax credits on dividends received. All you need to do is set up your automated monthly debit and watch your money grow. It is important to remember that like all investments share markets go up and down, but you are investing for the long term any short-term fluctuations should be considered buying opportunities.  As an example, let say you could get an average return on your investment of just 7% . This means your investment would approximately double every 10 years. So, if you invested $10,00 today at 7%, in 10 years, it would be worth $20,000 and in 20 years $40,000 and in 30 years $80,000 and in 40 years $160,000.  When you consider that your original investment was just $10,000, I’m sure you’ll agree it’s a VERY simple but powerful investment strategy.  We strongly believe that having a SYSTEM to invest is the KEY to building long-term wealth and setting yourself up for an early retirement. Please note: This information is general in nature , so before acting on any information , you must consider the appropriateness of the information provided having regard to your objectives, and financial situation.If you would like to discuss your financial goals and how to set up a system to achieve them, we invite you to BOOK NOW for a complimentary consultation to discuss your needs.   Until next time…