Rory Gillen's free book: "A guide to sound investing"

[Fella]

I don't really think euro cost averaging is that bad , its just regular investing , most people don't have huge lump sums to invest in the stock market and any habit of regularly topping up your investments in bad times and good times is to be encouraged. It's one thing knowing the right thing to do but its another thing doing it. I've invested a good portion of my savings but I found it mentally tough to put money in when the markets where going down. I invest a bit more each month now taking from my savings and adding to my investments , I may be losing out slightly long term but for me if there is a small loss its worth it anyway. Most people don't earn money in blocks anyway so its just like regular savings . If you've 500k in cash and decide you want to invest it in the stock market my advice would be maybe put in 200k and then drip in the rest over x years.

 

[Duke of Marmalade]

Fella regular investing is a good thing, as good as motherhood or apple pie. I'll give Rory the benefit of the doubt that that is all he meant. But the more pretentious version goes as follows: It is better to buy two lots of units priced at 0.5 and 1.5 with equal investments of 1 than to buy them priced both times at the average of 1. The former buys 2+2/3 = 2 and 2/3rds units whilst the latter buys only 1 + 1 = 2 units. That is an arithmetic truism just as valid as saying you buy twice as many units than if the prices had been double what they actually were. It is a classic "so what?" There is no economic substance to the arithmetic tautology. Said quickly, it sounds very clever and a bit of alchemy to generate a free lunch, salesmen loved it.

 

[Rory T Gillen]

I don't really think euro cost averaging is that bad , its just regular investing.

I wouldn't be put off by the 'Duke's' theorising. For many investors, regular investing is a critical part of sound investing as it assists with the emotional side of investing. It was no coincidence that I outlined the benefits of euro-cost averaging in the section in the booklet dealing with 'How to Mitigate the Risks', for there's no doubt in my mind that the markets' volatility is a risk to the extent that it creates fear, which then stops people investing when prices are lower and values better.

We run three regular investing portfolios on the GillenMarkets website, investing real money each month, to assist subscribers make decisions. That's the purpose to an investment newsletter. When markets dive - as they did in Jan 2016 - we tend to bring forward the monthly contributions to make the point that lower prices offer better value if you know how to assess the risks in the stock or fund you are buying. A mistake we all made in 2008 - myself included - was not to have understood banks and leverage well enough. I well recall being extremely bearish on Irish property from 2003 onwards, but somehow I did not read the consequences of a likely decline in property prices into bank bad debts. I made the naïve assumption that the scale of losses would be like past cycles. We live and learn.

 

[Odenwald80]

As an experienced investor in certain sectors of the market, I found Rory’s book a short simple and useful back to basics guide and helped me start a reassessment of my strategy. Always useful to start at a new point from time to time”.

 

[Brendan Burgess]

I presume nothing new is being added to this thread in recent pages.