The earlier you start providing for your retirement the better. Even if retirement seems a long way off, building a retirement fund takes time. Give your money more time to grow, and your investments will work harder for you.
A little can go a long way
You can start a retirement savings plan with just $50 a fortnight. By investing even small amounts regularly, you can use a strategy called ‘Dollar Cost Averaging’ to take advantage of market volatility over the long term.
What is Dollar Cost Averaging?
Investment markets rise and fall. Saving a set amount at regular intervals helps you counteract the effect of ups and downs in market prices.
It works because your regular investment will always buy more units when the market is down, and fewer units when the market is up. Dollar Cost Averaging lets you benefit from share based funds’ natural volatility, because investment markets generally rise in value over the long term.
Dollar Cost Averaging helps you because:
you don’t have to ‘guess’ when investment markets will peak or fall;
you can use market volatility to your advantage over time; and
you can smooth out the effects of market fluctuations.
You can use Dollar Cost Averaging to your advantage in a retirement savings plan. It complements the core principles of successful investing, but is no substitute for them.
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