Understanding Rand-Cost Averaging

Rand-cost averaging simply means investing a fixed amount at regular intervals, regardless of what the market is doing that month.

When prices are high, your contribution buys fewer units. When prices fall, the same contribution buys more. Over a long period this smooths out your average purchase price.

The bigger benefit is behavioural. A monthly debit order removes the decision that trips up most investors: whether now is a good time to invest.

It also makes investing accessible. You do not need a lump sum to start, and increasing the amount each year as your income rises has a substantial effect over a decade.

Rand-cost averaging does not guarantee a profit or protect against loss in a falling market. It is a discipline, not a shield, and it works best inside a plan with a clear time horizon.

This article provides general information and does not constitute personalised financial advice.