Reverse Dollar Cost
Averaging
You MUST Understand The Dangers Of Reverse Dollar Cost
Averaging!
Reverse Dollar Cost
Averaging
Studies have shown that the greatest fear for people in
their retirement years is the fear of out living their retirement savings.
This makes it imperative to
understand the dangers of reverse dollar cost
averaging.
There is a very common investment
strategy promoted by many well meaning risk based financial sales people called
Dollar Cost Averaging.
The concept encourages the investor to
invest the same dollar amount each month regardless of whether prices are high
or low. When prices are high, the investor buys fewer shares. When prices are
low, the investor buys more shares. If the stock market grows over time, and if
the investor retires at a market high, the average share price might be lower
than if the investor tried to time the market and invest 100% of their money all
at once. Of course, this
strategy is not a guarantee of positive results, even though virtually every
piece of sales literature shows this strategy to be effective.
What's truly tragic is that the dangers of the other side of
this coin are rarely if ever discussed by risk based financial sales people who
promote Dollar Cost Averaging.
When an investor sells the same dollar amount of their
retirement account each month regardless of whether prices are high or low to
produce consistant retirement income, they are selling fewer shares when prices
are high and more shares when prices are low.
Reverse Dollar Cost Averaging actually increases the risk of
outliving your retirement savings. This risk is amplified during a bear market
when prices are low for longer periods of time. If your retirement income is
exposed to unnecessary risk, the results can be
irreparable.
Fortunately, there are strategies and financial products
designed to completely eliminate the risk of outliving your retirement savings.
These strategies and products can guarantee income for life.
