My Experiences Concept of Dollar Cost Average Investing

One of the investment concepts I've been partaking in is the Dollar Cost Averaging Investing concept. The concept works great for someone who is after an automated and emotionless strategy. By buying into an investment product such as LIC or a managed fund with regular payments at regular intervals the investor is able to smooth out the anticipated market fluctuations over time. The investment strategy is one for the long term and with the use of automated payments can be an effective investment strategy with no great deal of thought required by the investor.

I have been using this strategy with the Vanguard Index Australian Shares Fund and below is a summary of its performance to date:

Initial Investment - $5000 @ $1.9023 per unit (10/12/2012)

Total Investment Deposits - $3401.72

Total Reinvestment Deposits - $518.71

Total Investment Payments - $8533.83

Actual Investment Value - $8476.04

Rate of Return - 0.67%

Not quite the result I was after but with franking credits my tax returns have been assisted with this fund in increasing my tax return. Also with over $500 worth of reinvestments into the fund, the rate of return calculated just with my money invested is 5.75%. All in all, a bit of a disappointing result so far but I'll stay the course given what the ASX300 index performance is like:

I'll continue to blog my portfolio performance at the end of month to track its progress. My next blog post will focus on a concept of Dollar Cost Averaging through buying shares at the optimum intervals.