Hello. I have very limited knowledge about stock market and Peso Cost Averaging (PCA). For example, I retire after 40 years of practicing PCA and the Philippine stock market has crashed by that time. Am I guaranteed to still make huge retirement money after all, I practiced Peso Cost Averaging?
Or will I wait like 1 year for the stock market to recover before I can sell my stocks to enjoy my retirement money? Let us say, I invest 5k quarterly. I’m not sure if I’m asking the right question, hope you get my point. I’m poor in Math as well and a bit sleepy š
Tags: investing, peso cost averaging
One Response to “Question on Peso Cost Averaging (PCA)”
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After 40 years: If it so happens that you retired on the year the stock market bottoms out on a bear market – then yes, your portfolio is affected.
But after 40 years of investing (i.e. continuous buying using cost-averaging) you’ll still end up with a big gain.
Take for example the recent bear run that happened this may-june 2013. All the stocks I bought and equity funds I got into on January 2013 and later were in the red.
But the equity fund I bough June2012 still had about a 20% gain – really.
So time is a huge buffer, if you have the discipline and the stomach to just ignore and withstand the occasional dips – no matter how big.
If you’re a newbie or don’t have much time to study, learn and follow the market, just stick to PCA and you’ll be fine.