Cost averaging is one of the first investing techniques people come across - here are our thoughts and watch-outs on using it for your portfolio.
Whilst the market does go up more than down, Dollar Cost Averaging is a great way to take the emotion out of investing. So you carry on buying as all the newspaper headlines are screaming doomsday, and then carry on buying all the way up. Also, whilst we are all very interested in investing, the ‘average’ person isn’t - so by setting up a recurring DCA payment also takes any hassle out of investing!
Lump sum investing, whilst probably being a better strategy in terms of returns, is more difficult because of the need to time the market. But if you’re able to do that then you will make excellent returns!