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Dollar
Value Averaging - Dollar value averaging is the periodic deposit to or
withdrawal from an investment to increase the account value by a
specific amount each period.
| Example:
You could decide to open a mutual fund account and set a target
for the account to grow in value by $100 per month. Every month
thereafter, you would add or withdraw whatever amount is
necessary to make sure the account value grew by exactly $100
each month.
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Several benefits of
automatic investing are listed below:
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Lower average cost per share
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Select your investments only once
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Minimal time investment
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No need to try to predict the market
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Buy low, sell high ensures
profits (asset alloca-tion and dollar value averaging only).
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Low cost (i.e., commissions, expenses, etc.)
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Can become a money machine
(dollar value averaging only)
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Little or no stress or anxiety
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Lessens the risk of investing large sums of money just before a drop in
the market
The following
section will provide much more detailed discussion and examples of the
automatic investment techniques of dollar cost averaging, asset
allocation, and dollar value averaging.
Summary
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You must take care of your own financial future.
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Automatic investing is easy and profitable.
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Mutual funds are professionally-managed invest-ment accounts pooling
money from many investors.
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Follow the 10% rule: Invest at least 10% of all your gross income.
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