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What is the difference between dollar cost averaging and value cost averaging?
If I have a DRIP with General Electric, what would be the difference between dollar cost averaging $50 per month or value cost averaging the same stock with up to $1,200 per year? What would be the ROI for each investment strategy for the five years from July, 2006 through July, 2011?
1 Answer
- cactusgeneLv 710 years agoFavorite Answer
That is too complex and time consuming a question to be answered on this forum. Here is the wikipedia explanation of value cost averaging, but its formula requires an ROI assumption, which we don't have. Also the ROI for the last five years will not reflect with what's happening to the market in the future, a SEC required statement to the performance chart in any prospectus. Past performance is simple no guarantee of future results. Stick with the good and tried old principle of dollar cost averaging, a concept that works.
