Cost averaging principle

Cost averaging principle applies in the context of the Fund Savings Plan (i.e. when regular fixed payments are made to an investment fund). The principle describes the effect of price fluctuations. If the s Fonds Plan is based on a certain fixed amount, more units of a fund are purchased when issue prices are low and fewer units are bought when issue prices are high. In the long term, this leads to a lower average purchase price than the regular purchase of a fixed amount of shares over the same period.

Depending on the performance of the investment fund, the performance of an Fund Savings Plan will differ from that of a one-off investment (higher or lower). A loss of capital is possible in both cases.