But I gave him my pep talk by saying, «Look at it this way — You just made ten years of contributions at more or less
the same average share price.
Not exact matches
If the asset's
price drops, you will be getting more
shares of the asset for the
same amount of money, and so if and when the
price recovers, you will have spent less per
share, on
average, than if you had bought the
shares at their peak pre-fall
price.
With coal
prices falling and natural gas
prices rising, the EIA says coal's
share of U.S. power generation in the first four months of 2013
averaged 39.5 percent, compared with 35.4 percent in the
same period last year.
Most of our investments have characteristics that have been associated empirically with above -
average investment rates of return over long measurement periods: a low stock
price in relation to book value, a low
price - to - earnings ratio, a low
price - to - cash - flow ratio, an above -
average dividend yield, a low
price - to - sales ratio compared to other companies in the
same industry, a significant pattern of purchases by insiders, a significant decline in
share price.
One final thought: If you were to take a $ 100,000 portfolio that pays an
average yield of 12 % and reinvest all dividends for the next 20 years, you would end up with almost $ 1 million (assuming the portfolio is in a tax - advantaged account), and that's assuming that all of the
share prices stay exactly the
same.
When dollar cost
averaging out of an investment, volatility does the
same thing — it reduces
average share price.
Because when you are dollar cost
averaging you are buying the
same dollar amount each month, but you buy more
SHARES when the stock
price drops.
Plus, get potential additional savings with Fidelity's
price improvement.1 While the
average industry savings per 1,000
shares is $ 2.30, our
average savings with the
same amount of
shares is $ 14.10.
Dollar cost
averaging means investing a
same - sized amount each month, let's say $ 500 per month, on the basis that this fixed installment buys you more fund units or equity
shares when the
price is low and fewer when the
price is high.
Instead of investing $ 1,200 in month 1 and receiving 120
shares in return, using dollar cost
averaging results in an additional 6.45
shares because as the
price drops, the
same $ 100 buys more
shares.