Cost-Average Effect
Simulates a savings plan with the same amount each month and changing prices and shows the return achieved.
Enter your own numbers and press "Calculate" – or load an example on the right; "Type in" replays it on the device.
Even if the price ends up back where it started, a profit emerges: during the weakness the fixed rate buys more cheap shares. That is why it pays to keep a savings plan going precisely in falling markets.
With a fixed rate you automatically buy more shares when the price is low, fewer when it is high. The calculator sums the shares bought each month (rate/price) and values them at the closing price; from that the return follows. This is how a profit emerges even in a sideways market.
When prices are low, more shares are bought – the average cost falls.