How finance folk use it
Peso-cost averaging is a technique used in investing. In this, you buy securities or stocks for a certain amount every month or quarter, with the intent of keeping them for a medium- or long-term duration. This means that, when prices are low, you’ll end up with more shares than when prices are high.
Is it good or bad?
Spreading your investment purchases across several months will minimize the risk and increase the chances for you to come out on top even with the typical market fluctuations. Plus, because the expenditure is in several small batches instead of at just one time, it becomes easier on the pocket.
However, peso-cost averaging is not always the perfect technique. Doing it may cost you an opportunity to make more profit by buying and selling, if you're able to do so at the right time.
But remember, finding the right time to make a lump-sum investment takes a lot of analysis and will never be a sure thing.
What it means for you
Peso-cost averaging lowers your investment risk but may not be as profitable as making a lump-sum investment. Like with any kind of investment, it's good to do your own research and figure out the strategy that works for you.
