Understanding of Dollar Cost Averaging

Dollar Cost Averaging Dollar cost averaging is a way to build your assets by adding to your investment at regular intervals. Here is an example of how it works. Example of Dollar Cost Averaging Let's say you invest RM6,000 per year for five years in a unit trust that started at RM10 per unit. The unit price changes over the five years, falling by 80%, to $2 then recovering to the original RM10. Dollar Cost Averaging Here is how it works out:   Year 1 Year 2 Year 3 Year 4 Year 5 Total Investment RM6,000 RM6,000 RM6,000 RM6,000 RM6,000 RM30,000 Avg Unit Price Paid RM10 RM4 RM2 RM6 RM10   Units Bought 600 1,500 3,000 1,000 600 6,700 Value           RM67,000        The total value of portfolio at the end of year five is 6700 units x RM10 = RM67,000. Altogether, you have invested RM30,000.