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Shares / Re: How does the satrix indi do so well?
« on: June 02, 2014, 07:59:09 am »You can't compare apples with apples. Somebody mentioned earlier in this forum about "probably due to the price fluctuation. Rand cost averaging". Remember, over a 3 year period you will via your monthly purchases, buy the dips. That would give you more bang for your buck as you are purchasing in those dips giving you more "shares" in the ETF for the same amount of money.
In those dips, the lump sum option will actually lose money and will most probably make it back once the market rises again, but the monthly oke got more out of that dip.
Hmm, I've had a think about it and I think... I'm still right
The only way buying monthly would be better, is if the dips drop lower than your initial purchase price, otherwise the lump sum bought straight away is better. I can see the dips being lower than the initial purchase for the first few months, but after a year or more there's very little chance bar a crash...
I would say the monthly purchase is lower risk though, as if there was a crash you'd get your rand cost averaging, but lower risk would again mean lower reward in the majority of cases.