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Systematic Investing Dollar-Cost Averaging Method: Value-Average Method

This document compares the dollar-cost averaging and value-averaging methods of systematic investing. Dollar-cost averaging involves investing a fixed amount at regular intervals, while value-averaging aims to maintain a target investment value by adjusting the amount invested. An example is provided tracking the performance of both methods over 12 months using hypothetical market data. The dollar-cost averaging method results in a total investment of $12,000 with a return of $1,561.51, while the value-averaging method requires $14,243 of investment to achieve the same dollar-cost averaging return.

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63 views1 page

Systematic Investing Dollar-Cost Averaging Method: Value-Average Method

This document compares the dollar-cost averaging and value-averaging methods of systematic investing. Dollar-cost averaging involves investing a fixed amount at regular intervals, while value-averaging aims to maintain a target investment value by adjusting the amount invested. An example is provided tracking the performance of both methods over 12 months using hypothetical market data. The dollar-cost averaging method results in a total investment of $12,000 with a return of $1,561.51, while the value-averaging method requires $14,243 of investment to achieve the same dollar-cost averaging return.

Uploaded by

fbxurumela
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLS, PDF, TXT or read online on Scribd
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Systematic Investing

1
2

Dollar-Cost Averaging Method:


Invest the same amount of money at regular interval
Value-Average Method
Set a target value of investment at regular interval and invest the necessary amount to maintain the target value
Input numbers in the yellow fields and see how it impacts the returns

Date
1-Jan
1-Feb
1-Mar
1-Apr
1-May
1-Jun
1-Jul
1-Aug
1-Sep
1-Oct
1-Nov
31-Dec

$
$
$
$
$
$
$
$
$
$
$
$

Price
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
3.00
4.00
5.00

Dollar-Cost Average

Value-Averaging

Fixed Amount at Regular Interval

Increase the Total Worth by a Certain Amount at Regular Intervals

Buy
Shares
100.00 $
111.11 $
125.00 $
142.86 $
166.67 $
200.00 $
250.00 $
333.33 $
500.00 $
333.33 $
250.00 $
200.00 $

Amount
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00
1,000.00

12,000.00

Total

Value
Shares
Amount
100.0 $
1,000.00
211.11 $
1,900.00
336.11 $
2,688.89
478.97 $
3,352.78
645.63 $
3,873.81
845.63 $
4,228.17
1,095.63 $
4,382.54
1,428.97 $
4,286.90
1,928.97 $
3,857.94
2,262.30 $
6,786.90
2,512.30 $
10,049.21
2,712.30 $
13,561.51

Gain/Loss
Yield

ROI

Mth 0
Mth1
Mth 2
Mth 3
Mth 4
Mth 5
Mth 6
Mth 7
Mth 8
Mth 9
Mth 10
Mth 11
Mth 12
Market Scenarios.
Change as desired

Amount of investment required


under dollar averaging method

$
$

$
$
$
$
$
$
$
$
$
$
$
$
$

Buy
Shares
100.00
123.00
154.64
199.83
267.64
376.14
566.02
945.81
1,895.29
(1,187.81)
(592.04)
(353.72)

13,561.51
1,561.51
0.70%

$
$
$
$
$
$
$
$
$
$
$
$

Value
Amount
1,000.00
1,107.02
1,237.08
1,398.83
1,605.83
1,880.68
2,264.08
2,837.42
3,790.59
(3,563.42)
(2,368.15)
(1,768.59)

Shares
100.00
223.00
377.64
577.47
845.11
1,221.24
1,787.26
2,733.07
4,628.36
3,440.55
2,848.52
2,494.80

9,421.36
Gain/Loss
Yield

(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
(1,000)
12,562

Mth 0
Mth1
Mth 2
Mth 3
Mth 4
Mth 5
Mth 6
Mth 7
Mth 8
Mth 9
Mth 10
Mth 11
Mth 12
Results

Amount of investment
required under value averaging method

$
$
$
$
$
$
$
$
$
$
$
$

$
$

$
$
$
$
$
$
$
$
$
$
$
$
$

Amount
1,000.00
2,007.02
3,021.09
4,042.29
5,070.65
6,106.22
7,149.05
8,199.20
9,256.72
10,321.66
11,394.07
12,474.00

12,474.00
3,052.64
4.07%

(1,000)
(1,107)
(1,237)
(1,399)
(1,606)
(1,881)
(2,264)
(2,837)
(3,791)
3,563
2,368
1,769
14,243

Targets are set


equal to the yield
from dollar averaging

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