Peso Cost Averaging is a personal wealth-building strategy that involves investing a fixed amount of money at regular intervals over a long period.
How Does Peso Cost Averaging Works?
(From: Citiseconline.com)
How Does Peso Cost Averaging Works?
This strategy is designed to reduce market risk by stretching out the purchase of stocks over time, buying more when prices are low and buying less when it is high, effectively keeping your average cost low.
Peso Cost Averaging - Illustration
In the above illustration, the investor purchases Php5,000 worth of ABC's stock whatever the price maybe. The table above shows that when prices are high (P11.75) less shares are bought (426) but when prices are low (7.5) more shares are bought (667).
This strategy brings down the average cost per share. This strategy works because it is said that value of stocks tend to increase overtime. The key strategy is to keep on purchasing regularly even if prices are going down or going up.
(From: Citiseconline.com)
(Note: I am not affiliated with Citiseconline or getting paid to promote their services. I use them because i learned Peso Cost Averaging from them)
