To remain financially responsible, everyone must pay bills on a regular basis. These bills include mortgages, utilities, car loans and credit cards.

Unfortunately, many people do not heed the advice to pay themselves first.

The reality is that a steady saving and investment plan is sometimes necessary to help pursue such financial goals as paying for a wedding or new car, buying a house and funding retirement. One strategy that can help you develop a systematic investing plan, while potentially saving you money and easing your mind along the way, is dollar cost averaging (DCA).

Dollar cost averaging is a technique in which investments of defined amounts are made on a regular basis. As a long-term, disciplined strategy, DCA can help you take advantage of the benefits of compounding to potentially build a sizable sum.

Aside from offering a disciplined, trouble-free way to save and invest, another potential benefit of using DCA is that it ensures that your money purchases more shares when prices are low and fewer when prices are high. Over time, the result could be that the average cost to you may be less than the average share price.

Dollar cost averaging also can offer the psychological comfort of easing into the market gradually instead of plunging in all at once. Although DCA does not assure a profit or protect against a loss in declining markets, its systematic investing “habit” helps encourage a long-term perspective, which can be soothing for people who might otherwise avoid the short-term volatility of riskier, but potentially more profitable, investments, such as equities.

DCA may help you make savvy investment decisions if you stick with it. For example, if your investment rises by 10%, you will likely post big gains because of the shares you have accrued over time. And if it declines by the same amount, take comfort in knowing that your next investment will purchase more shares at a less expensive price—shares that may regain their value and even exceed the higher price in the future.

As a long-term strategy, you may find DCA can help to potentially lower your average cost per share, while allowing you to feel more comfortable during uncertain markets. Keep in mind, however, that you should consider your ability to purchase over long periods of time and your willingness to purchase through periods of low price levels.

So, pay yourself first and do it often!!

Michele Bjorkgren, Financial Advisor

p. 515.327.1020 x13

Securities Offered through FPL Financial

Member FINRA/SIPC

A little more about us:

Compass Financial  is an independent, fee-based financial advisory firm in West Des Moines, Iowa. The Compass Team helps individuals and families develop an inspiring vision of their financial future and a realistic strategy.

By listening closely to our clients’ true needs, wants, hopes, desires and dreams we are able to combine Wealth Management and broad Financial Planning customized to each individual situation. It’s our goal to assist you in developing a personalized financial road map. The results from the process should include confidence that comes from planning. As we all know, life happens, sometimes ambushing the best laid plans. Accepting a new reality and adapting the financial plan is work we have done many times for our clients.

Sometimes life’s biggest challenges come in the form of transitions, retirement, marriage, health issues, divorce, unexpected loss, or even college savings. Our team at Compass has experienced many of these life transitions, it’s our hope to come alongside you and your family. These defining moments of life provide opportunities to implement financial strategies that can have long lasting impact. The first step is always the most difficult, but can also be the most rewarding. Please Contact Us today to receive your free, no obligation, one hour initial consultation!

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