Shoebox Investor

What is a shoebox investor? An investor who generally pays himself first. The idea is that any money you can store in a shoebox or piggy bank, should be invested in the market. It is not how much you invest, it is the time value of money you should focus on. The earlier you put the money in the market, the longer you keep it in, the higher the chances of reaping the benefits of accumulating dividends. The reinvested dividends will buy you more shares.

Pay yourself first

Sunday, February 10, 2008

Dollar-Cost Averaging (DCA)

Dollar-Cost Averaging (DCA)
What does it Mean? The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.

Also referred to as a "constant dollar plan".

Investopedia Says... Eventually, the average cost per share of the security will become smaller and smaller. Dollar-cost averaging lessens the risk of investing a large amount in a single investment at the wrong time.

In the U.K., it is known as "pound-cost averaging".
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