Dollar cost averaging is an easy and effective accumulation strategy.
Investment
Senior Living: A simple way to invest – Goderich Signal Star
Trying to save money and invest in an RRSP or TFSA once a year is challenging for most Canadians. It is difficult to plan life events throughout the year, let alone save to invest in the market. Often by the end of the year, most people find they have not made the investment savings they had hoped to make when the year started.
By waiting until the end of the year, many discover they lack the funds to invest or have to use a line of credit or RSP loan to make up for lost savings to invest in a tax-advantaged registered plan.
Even if you do have the funds, making a one-time lump sum investment still is not as advantageous as a structured accumulation strategy because it potentially causes you to lose out on compounding investment and dividend returns.
Dollar cost averaging is one of the best accumulation strategies that is simple and easy to maintain for the average investor. It removes the need for you to time the market or to try and predict the optimum moment to make an investment.
Market timing is very difficult, even for the professionals. With this strategy, an investor decides how much to invest on a monthly basis and then makes a regular deposit to their savings strategy according to their asset allocation.
By contributing on a monthly basis, you can ensure that you will not miss out on market upswings. While it is true you may be at times buying stock that is at a higher price, the basis of this concept is that by investing regularly, the average cost of the investment over the long run tends to be lower.
For those investors who took advantage of this accumulation strategy this year during the COVID pandemic, many will find that they have yielded a much higher average per unit cost and will therefore realize a greater return over the next few years.
Dollar cost averaging has been a proven strategy for decades, no matter what has happened in the market. Investors stand a much better chance of investing some of their money when the market is at its lowest point thereby increasing the growth, compounded interest and dividends, and ultimately making more on their overall portfolio. Talk to your adviser about dollar cost averaging for your retirement portfolio.
I have many clients using this strategy and can say with great confidence that this method really does work and many investors who use it, when asked, would never invest any other way.
— Christine Ibbotson is author of Don’t Panic: How to Manage Your Finances and Financial Anxieties During and After the Coronavirus and How To Retire Debt Free & Wealthy. She also writes the Moneylady column. askthemoneylady.ca
Economy
S&P/TSX composite down more than 200 points, U.S. stock markets also fall
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
Economy
S&P/TSX composite up more than 150 points, U.S. stock markets also higher
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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