Dollar cost averaging can be a great way to get started in investing and build wealth over time.
定期定額投資可以是開始投資並隨時間累積財富的好方法。
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With small contributions on a regular basis, you can build a respectable investment portfolio, without changing your current lifestyle. In this video, we'll cover a full breakdown of what dollar cost averaging is and how it works.
Hey, welcome to Rhinance, the channel centered around your financial education to help make you a better investor. Be sure to subscribe to the channel as I upload new educational stock market videos every week. The term dollar cost averaging can sound complex and intimidating,
but it's really quite simple. It just means that you are consistently adding money to your investments on a regular basis. Dollar cost averaging is a long-term investing strategy, in which you set a monthly budget and buy into your favorite investments with that budget every month. You can do this with all kinds of investments such as stocks, bonds, ETFs, mutual funds,
and really anything else. It's a great way for beginners to get started in the market, and for more seasoned investors to stay disciplined and focused.
以及幾乎任何其他東西。這是初學者進入市場的好方法，也能幫助經驗豐富的投資者保持紀律和專注。
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Many investors use this strategy, including myself, to build wealth in your portfolios over time.
許多投資者，包括我自己，都使用這個策略來隨時間建立投資組合的財富。
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It's a simple way to build a portfolio as investing small amounts on a regular basis is much easier than trying to save and invest a large amount all at once.
這是建立投資組合的簡單方式，因為定期投入小額金額，遠比試圖一次存下並投資一大筆錢要容易得多。
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Dollar cost averaging helps remove the emotional bias out of investing and actually increases the chances of having successful investments. With consistent buying, you are able to smooth out the ups and downs of the market and end up with positions that average out to a lower cost than
the market price. Dollar cost averaging works by taking a preset amount of money and investing it on a regular basis, something like $250 every month on the first of each month. Over the course of time, the market will move up, down, and sideways and you'll be buying all along the way.
When the market is cheap, you'll be getting a good deal and be able to accumulate more shares.
當市場便宜時，你會買到好價位，並能累積更多股數。
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On the other hand, when the market is more expensive, your money won't go as far and you won't be able to buy as many shares. What happens then is you'll be accumulating more shares at cheaper prices and less shares at higher prices. This usually results in the average cost of your investments
staying relatively low, which is a good thing. So let's illustrate how this may work in the real world. As an example, let's say you want to invest $250 on the first of each month into the US stock market. We will use the SPY index fund as an investment vehicle to be buying
the companies that make up the S&P 500. Here's a look at the graph of the S&P 500 for the time period between January 1, 2020 to June 1, 2020. We are going to use this six month period as an
example. So on January 1, 2020, you begin dollar cost averaging into the SPY index fund.
所以在 2020 年 1 月 1 日，你開始對 SPY 指數基金進行定期定額投資。
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The price per share was $296, and let's assume you can buy fractional shares, in which your $250 investment buys you 0.84 shares of the index fund. Onto February 1, the price is now $305, so you get 0.82 shares as you make another $250 investment.
In March, we start to see the market decline because of the COVID-19 pandemic, and you were able to buy 0.92 shares this month. Notice that even though you were still investing $250, you are now getting more shares for your money. The downward pressure from the pandemic
continues in April, when you were able to buy 1.1 shares this month. Nice, this month you were able to buy a full share and even a little more. This is much better than the 0.84 shares you bought in January. In May, the market starts to recover, when your next $250 investment buys you 0.93 shares.
And lastly, on June 1, the market sits close to its pre-COVID levels, so you buy 0.85 shares of the index fund. So now let's have a look at how this investment has done so far. Through the ups and downs of the market, you would have invested a total of $1,500 and accumulated 5.46 shares. The price of the SPY as of June 1, 2020 was $293,
so we multiply 293 by the number of shares you have, 5.46, to find that your investment is worth $1,600. By doing this, you've made a gain of $100, or 6.7%, not bad! What's really interesting
From January 1 to June 1, the market moved down from $296 to $293, showing a loss of $3 per share or negative 1%. By dollar cost averaging, over this period of time, you were able to generate a
profit of 6.7% when the market actually declined and lost 1%. This shows how dollar cost averaging can be very powerful over the long run. So now that you've seen this in action, let's cover some of the benefits of dollar cost averaging. First of all, timing the market is
extremely difficult to do correctly over the long term. Like our example showed, if you had invested all $1,500 on January 1, you would not have done as well as if you spaced out the investments.
It's much easier for an investor to buy little bits at a time and end up with a profitable investment.
對投資者來說，分批小額買進，最終獲得獲利的投資要容易得多。
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On top of this, most people don't have large piles of money sitting around to dump into the stock market. And even if you did, that would be a pretty terrifying thing to do.
此外，大多數人手頭並沒有大筆閒錢可以一股腦投入股市。即使你有，那也是一件相當可怕的事。
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By dollar cost averaging, you can find an amount that fits within your personal budget and allow you to build wealth. If you're a beginner and looking to get started, dollar cost averaging is a great way to do it. Lastly, investing can be an emotional rollercoaster ride as you watch your hard earned money go up and down in value on a daily basis.
One of the best things you can do for your financial future is to find a way to take the emotions out of it. By dollar cost averaging, you are committed to increasing your account value and building wealth without having to fight the emotional bias of whether now is a good time to buy or not.
Before I close out the video here, I would like to touch on some of the downsides of this investing strategy. Similar to what I had mentioned before, lump sum investing, where you deposit and invest large amounts at one time, can sometimes do better than dollar cost averaging.
在結束這支影片之前，我想談談這種投資策略的一些缺點。正如我之前提到的，一次性投入（Lump Sum Investing），也就是一次存入並投資大筆資金，有時表現會比平均成本法更好。
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From the example before, if you had invested the full $1,500 during the March lows of 2020, your investment would have grown to $1,758, which is really good. That's a $258 gain, or 17%.
So yes, you can do better with correct timing, but keep in mind that you can also be wrong in your timing. There's a famous saying in investing that goes time in the market beats timing the market, and I think that this is very true and something that most people should follow. Finally,
所以是的，如果你時機抓得準，表現會更好，但請記住，你的時機也可能出錯。投資界有句名言：「在市場裡的時間（Time in the market）勝過試圖預測市場進場時機（Timing the market）」，我認為這非常正確，也是大多數人應該遵循的原則。最後，
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it should be mentioned that since you are buying more often with dollar cost averaging, you will also be paying commission and trading fees with each buy. Fees are important and something to pay attention to because they do count against your performance in the market. Recently, however, there has been a rise in commission-free trading platforms such as Robinhood and Wealth Simple.
This is not an endorsement for these platforms, but using one of these platforms may be a great way to completely eliminate the fees associated with investing. I would encourage you to do your own research on stock brokerages to find one that suits your personal needs. Thanks for watching today. What do you think about dollar cost averaging? Do you do this in your investments,
2Inthe 2020 example, whatwasthetotalamountinvestedoversixmonths?在 2020 年的案例中，六個月內的總投資金額是多少？Inthe 2020 example, whatwasthetotalamountinvestedoversixmonths?
