I wish to tell all the Pseudo Drip zealots and fanatics out there, that today, i painstakingly read all 232 posts and by doing so, am greatly enlightened.....My question of concern is this, Should I invest monthly or quarterly?There was 2 posts mentioning this, however, they were not adaquately answered for me....I will tell you my situation.I currently have an account with Share Builder.for the 1st month, $1,000 ,, BAM is invested in stock XYZevery month thereafter, $300 is invested in stock XYZ, or $900 quarterly would be invested into stock XYZ.So, i could do $900 quarterly = 5 trades (counting inital $1,000)5 * $4 = $20 $20 / $4600 = .43% commissionsor....13 trades * $4 = $52$52 / 4600 = 1.13% commissionsAs you can see, not a great deal of commission cost for both plans, but which will be more beneficial for my overall return? Driping more frequenly, or less?Any help would be greatly appreciated..SirClayton
The short answer is that the more often you invest, the more you will reduce your risk.http://www.fool.com/dripport/2000/dripport000328.htmCheers -george
As you can see, not a great deal of commission cost for both plans, but which will be more beneficial for my overall return? Driping more frequenly, or less?Statistically, the answer is neither. There is no significant benefit either way in the long term. The 0.7% savings in commissions is more than offset by the variation in average purchase price. George's article missed the point of dollar cost averaging. He didn't figure out the average purchase price would be under the various scenarios. The bottom line is that monthly or quarterly dripping plans will probably end up with an average price within a couple percentage points of each other and there is no guarantee that a greater frequency will mean a lower purchase price. Here's a post I made a while back on the subject. I should mention that this study used a long purchase period (5 years). Don't expect the results to be the same for shorter periods.http://boards.fool.com/Message.asp?mid=13258901Marv
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