You have probably heard people talking about buying low and selling high. Sounds pretty straight forward, doesn't it? And if you believe what you hear during dinner party conversations, your neighbour or friend is a genius at it. Whether property, shares or bitcoin they seem to be able to buy low and sell high all the time.
The truth is that even professional investors have a difficult time picking the bottom or top of a market. No one likes to admit when they have lost money, so it is easier to never talk about it!
Dollar cost averaging
Dollar cost averaging is the strategy most professional investors (including super funds) turn to, to reduce the risk of buying at the wrong time.
How does it work? Instead of trying to pick market highs and lows, you buy a fixed amount of an investment on a regular schedule. Because the amount you invest, and the timing doesn’t change, the cost per share tends to average out over time. As a result, you pay the average price for a share, not the highest or the lowest price.
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General advice disclaimer
This is general information only and does not take into account your personal objectives, financial situation or needs. You should assess whether the information is appropriate for you having regard to your objectives, financial situation and needs and consider obtaining independent professional advice before making an investment decision. If information relates to a specific financial product you should obtain a copy of the product disclosure statement for that product and consider that statement before make a decision whether to acquire the product.