The Duchschnittskosteneffekt (also Cost AVERAGE effect) is an effect, which develops with the regular plant equal lasting amounts into securities (mostly funds).

Fluctuations in value of the securities lead to the fact that the investor keeps its portions more favorable with equal lasting rates on the average, as if he buys a remaining alike quantity of portions regularly at differently high prices. Because are bought with high portion prices automatically fewer portions, with low portion prices according to more.

Since in the process of saving ever more capital collects, which is subject to the fluctuations of the portion prices completely, and there the average cost effect with increasing running time of an austerity plan constitutes, continues to remove the individual rate a ever smaller becoming fraction of this capital always. That is, the saved fortune behaves now, as if one would have put on uniquely a high sum money and exchange rate fluctuations to affect itself superproportionally the net yield out both upward as well as downward.

Different studies of considerable economists put closely that on the Cost AVERAGE Effect which are based investment strategies lead to no significant net yield increases in relation to (simple) other strategies. The utilization of the Cost AVERAGE Effect leads only to the fact that due to the remaining alike per portion/share the harmonious means of the courses is paid on the average. This is always somewhat under the arithmetic means, which was paid with regular purchase equal lasting numbers of items.

Problematic it is however in particular that the strategy used as comparison (purchase the same number of items) is assignable only afterwards, since with knowledge of the trend of prices the number of the bought shares/portions is only certain.

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The Cost AVERAGE effect in the investment advice (in the pdf format)

Articles in category "Average cost effect"

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