Quiz Club: Dollar Cost Averaging
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Before we get started, we'd like to ask you a simple question: Have you ever experienced that you know the name of something but don't really know what it is? When it comes to investing, you may find yourself having some underlying knowledge blind spots. The earlier you discover and eliminate them, the better off you will be.
1. Do you know?
1. Do you know?
DCA is an investment strategy in which an investor divides up the total amount to be invested across periodic purchases of a target asset with an aim to lower the impact of volatility on the overall investment. The purchases occur regardless of the asset's price and at regular intervals.
A typical example of dollar-cost averaging is the periotic investment in 401(k) plans. Regular purchases are made regardless of the price of any given equity within the account.
*source: investopedia
*source: investopedia
You may share your experience in the comment area:
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Have you ever adopted the DCA strategy?
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Would you like to share with us your real-world cases?
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Why would you use DCA to build wealth?
2. Testing Time
If you are to eliminate the blind spots, you need to be aware of them first. Let's take a baby step to get started. As the saying goes, many a little makes a mickle. Every step you take brings you closer to the goals of your investing journey. We've prepared a little test for you. If you get it right, you may have a taste of victory.
Let's take a look at what it is!![]()
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Please comment below to let us know your answers and reasons for the question. The correct answer will be announced later. We are looking forward to your participation!![]()
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Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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AlfonsoDex : My strategy of using DCA are for i) overcome the short term volatility and iii) lower the average costs per share. For i), I am doing a recurring monthly buy of 100 shares on $Nikko AM STI ETF(G3B.SG)$ to average out short term effects. iii) For my $OCBC Bank(O39.SG)$ and Reits, I take the opportunity to buy more shares during the dip to lower the costs per share over a period.
So for long term investment, one would be able to increase your portfolio for more dividend gains, yet simultaneously having a fair chance to enjoy good capital gains if one wishes to sell off.
NANA123 : Dollar cost averaging can help lower the amount I pay for investments and minimize risk. Instead of purchasing investments at a single price point, with DCA I buy in smaller amounts at regular intervals, regardless of price. Over the long term, DCA can help lower the investment costs and boost our returns.
Milk The Cow : Ans:
1) overcome short term volatility
2) reduce average cost per share
I choose these two
Milk The Cow Milk The Cow: 1) The price can't be continuing volatile throughout the long term= Short term
Your stock position cost per share is the average cost, which is the result of DCA.
2. Moomoo app has done the the calculation for us if u notice
Madiq Izichi : DCA can also been seen as Doubling Down, as no one can guarantee the stock price will increase, sometimes doubling down is a bad idea and it's better to cut your losses.
Joepoe : 3 reduce average cost per share
4can be used in 401k plans
Admiralty100 : I use DCA to:
1. lower the average cost per share
2. Use it to overcome short term volatility
3. It can be used on 401K
4. Since I get paid every two weeks it is the only way for me to raise some investment capital by consistently investing on a stock I believe that long term will do very well despite short term volatility
Blake Armstrong : $Iamgold (IAG.US)$ is one out of four a total of five stocks i was supposed to be getting when I completed account setup but i had only received one
71647741 NANA123: do you apply to all your stocks across the board or focus only on certain types
NANA123 71647741: certain types
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