Savvy investors know that periodic purchases of silver help you average in the best price in the long run, and also ensure that you continue making purchases regardless of emotional thoughts on the market. This idea of making regular, incremental investments is called dollar cost averaging, and is popular with the physical silver investment crowd.
Dollar Cost Averaging
Dollar Cost Averaging (DCA), also known as unit cost averaging, involves buying something at regular intervals over an extended period of time to gain an averaged price. This means that the overall purchase price is not heavily influenced by a purchase on a particular day or month.
Dollar cost averaging works the same way a 401(k) works. It means investing through the good and bad times in order to minimize risk and keep investment tracking steadily. It works particularly well for assets that are volatile, but swing between a central upward line. Most assets have had this characteristic over the last dozen years or so, so DCA is particularly relevant in these uncertain times.
Some investment experts state that it is best to invest early at a good price by picking your entry point and buying a lump sum. If an asset is increasing in value this provides maximum opportunity to benefit from upward price movements. There is of course merit in this strategy too, but not all of us can afford to invest lump sums and monthly investment is normally far more practical.
Investment is Best Done Monthly
In our opinion, the best way to invest long term is to commit to regular contributions. By having the discipline to invest on a monthly basis we can ensure that we are making the best use of our financial resources to build wealth and accumulate assets. Otherwise we tend to buy liabilities like the newest fridge, top of the range car and best tailored suits (even when we don’t really need them). It is nice to have nice things but investment should come first.
The JM Bullion AIP
JM Bullion has a one of the best schemes I have come across to facilitate regular investments. It is called the Automatic Investment Program. It can be found here http://www.jmbullion.com/automatic-investments/. It provides a means by which silver investors can invest with minimal hassle and maximum returns.
- You simply choose the amount you want to invest every month.
- Then choose the exact distribution of assets for your capital.
- Then JMB will add the amount of asset that fit your budget to your portfolio when your investment cycle comes around.
You are in Control
You are in control of the amount you invest. You will receive your investment silver, fully insured, in the post every month. The best payment methods are check or wire transfer, as you will save 4% on the prices listed on the JMB site. However, you can chose recurring credit card payment if easier. It is well worth looking into setting up a regular wire transfer to save money and maximize returns.
Budget for Investment
Monthly investment should only be made at an affordable level that does not put pressure on your home finances. Do your budgeting and leave a safety margin. The great thing about the JMB AIP is that you are not tied in. If your situation changes you can simply reduce your monthly investment. It is a great way to ensure that you are making a solid contribution to your wealth development each and every single month.