SMP FAQ - What is dollar cost averaging and how does it work?

June 28, 2016 - 10:05
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Question: 

What is dollar cost averaging and how does it work?

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Contributions/Funds Information
Answer: 

It is an investment strategy for reducing risk or the volatility in the market. Since most members are paid once or twice a month you are automatically dollar cost averaging in the SMP plan. The amount of shares you can purchase for a fixed amount of money varies inversely with the price of those shares. In other words, if the share price of your selected investment declines, you will purchase a greater number of shares with each payroll. Conversely, if the share price of your selected investment rises, you will purchase a fewer number of shares.

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