Take advantage of Halal Managed Funds Today
Stop trying to time the share market and take advantage of share investing using dollar cost averaging. Ultimately, there are only two ways to make money: by working and/or by having your assets work for you. If you keep your money in your back pocket instead of investing it, your money doesn’t work for you and you will never have more money than what you save.
Over the last 100 years global share markets have experienced many major set-backs, including the Great Depression of the 1930s, several wars, the ‘crash of 1987’ then the Global Financial Crisis twenty years later. But for every low, a recovery has followed – they just take time. What stops most people from investing is not knowing where to invest or when to jump in. Although nobody knows exactly when a market or a particular share price has found its base price, we can employ a strategy to remove this speculation and focus on a longer term investment plan.
Averaging into the share market
A regular savings plan involves putting aside a small amount of funds on a regular basis to make investments of a set amount at regular intervals. This is a suitable strategy for people who don’t have a large sum of money to invest immediately but are able to build up an investment portfolio over time. The other advantage of investing this way is that it removes the decision-making process of trying to pick the cheapest time to invest (which is impossible). Instead, investing regularly in the market applies the concept of ‘dollar cost averaging’.
The aim of dollar cost averaging is that the average cost of the investments will always be below the average value of the investments during the period.
Take this example
A novice investor called Adam has no savings but decides to make the effort and after three short months he has saved $500 to invest. It was so easy that Adam continues to save and invest $500 every three months over a year. During this time the share price rises and falls, which gives the overall result as follows:
As can be seen in the table, Adam benefits despite the upward and downward fluctuations in the market. The average cost of the units at the time of the last investment is $1.01 ($2,000 divided by 1977 units), yet the value of the share at that point in time is now $1.40. Furthermore, dollar cost averaging can act as a form of diversification, enabling investors to stagger their entry into the market instead of taking the risk associated with making a large single purchase.
Be sure to consult your financial planner if you wish to take advantage of this strategy. If you have been struggling with your investments, give us a call at 1300 043 529 and we discuss about how we can help you build your wealth in ways that aligns with your values.
At Hejaz, We believe that good investment decisions come from research, analysis, years of experience and a deep, human understanding of markets. Whether it’s navigating the ASX, growing your capital via international markets, buying big city buildings or chasing outperformance in property markets, our expert teams are focused on taking your return on investment to a whole new level. Let us make the hard decisions for you and do what we do best.
Note: past performance is not an indicator of future results.