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Video: Periodic Savings, How Does It Work? - DFSIN

Video: Periodic Savings, How Does It Work?

Financial markets can be volatile and in the short term, it’s difficult to predict the right time to buy or sell your mutual funds. However, there is a good strategy to be less exposed to market fluctuations: periodic savings!

September 14, 2017

To be less exposed to market fluctuations, regularly investing the same amount is a good strategy. How does it work? It's very simple, every month you  invest the same amount in the same mutual fund.

Video: Periodic Savings, How Does It Work?

In the ideal investment scenario, you buy your mutual funds when prices are low and sell them when they are high. Unfortunately, financial markets can be volatile and in the short term, it’s difficult to predict the right time to buy or sell.

To be less exposed to market fluctuations, regularly investing the same amount is a good strategy.

How does it work? It's very simple, every month you invest the same amount in the same mutual fund. 

This way of investing allows you to manage the average purchase cost of your investments.  You’ll have peace of mind regardless of market conditions. If prices go down, you’ll be purchasing more mutual fund units ; if they go up, you’ll be buying less. Over time, the unit cost gets averaged - it’s neither too high nor too low. 

This investment strategy also ensures a savings discipline. As you contribute each month, you accumulate mutual fund units gradually without having to think about it.

It’s not necessary to have a large amount to start. You can set up a regular investing plan for as little as $50 a month. To learn more, consult your mutual fund representative.

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