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#InvestingStrategies When investing your money, there is no investment strategy that will make up for investing in a bad investment vehicle. So before you worry too much about dollar cost averaging vs actively investing, be sure to do your due diligence on whatever asset you invest in. In my opinion, one of the simplest and effective strategies for new and seasoned investors alike is dollar cost averaging. With that said, I recently learned about Value Averaging through the book linked below and can say I'm intrigued. #DollarCostAveraging This approach ignores trying to find the right #EntryPoint and instead sets a set time and amount and invests that money into whatever the selected asset was over and over again. This over time will ensure that the average share price will weight lower. This occurs because your fixed amoount of money buys less shares at a higher price and more shares at a lower price. For instance, if you #DCA $100 a month into an index fund such as FNILX which is $15.5 currently, you could buy 6.45 shares at current price but only 6.25 shares at $16 in the future or 6.67 shares at $15 in the future. So more shares at a lower cost basis per share will mean a lower share average. It is simple, easy to follow, and when paired with broad index funds or target date funds can be a "safer" or steady way to build a retirement savings. This is what I do in my own 401k through my work - I put in a % of my salary every pay day into a Vanguard Target Date 2050. #ValueAveraging This approach is for those that enjoy dollar cost averaging but don't mind being a little more involved to try and get a higher return. The book linked below shows how value averaging can consistently outperform whole share averaging and dollar cost averaging via back testing and even randomly generating future possible markets. Instead of investing a set amount at a set time, value averaging invests enough to ensure that the investment has grown by a set amount over a set time. So if I started the first month investing $100 into FNILX, then the next month if the $100 in FNILX had gone down in value to $95 then I would have to invest $105 that month to get the same $100 I wanted it to grow plus the $5 it lost. Alternatively, had the $100 in FNILX gone up to $105 then I would only need to contribute $95 for that month. By investing more money when the asset is down and less money when the asset is up, it will more greatly exaggerate the weighting towards lower share price. These are broad strokes and would highly recommend the book to kick the tires and get into the more gritty details - thank you @spinchange for the book recommendation! Portfolio Builder - Investing Strategies: Book on Value Averaging - What is a 401k - Fundamental Analysis - Technical Analysis - Investing Strategies -
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