Dollar cost averaging investor

By investing equal amounts of cash each year, fewer stocks will be acquired when prices are higher and more when prices are lower. It is therefore an ideal way of investing for those with a regular savings plan.

In disaster years when the market was down, the price value of the investor's holding bottomed, but it was the additional units bought in these disaster years when prices were low that enabled a positive overall return. A particular year that was considered to be a great year for the stock market, was also the worst year for our dollar cost averaging investor.

By investing a portion of annual income once a year in good businesses, young investors need not care what happens to the price. Rather than cause for gloom, market crashes are a reason for celebration.