Cost averaging (Cost-Average-Effekt)

With cost averaging you invest the same amount at regular intervals, for example through a savings plan. When prices are low you get more units, when they are high fewer. Your average purchase price therefore ends up below the average of the prices.

Important: this is an advantage over buying a fixed number of units, not over investing a lump sum. As markets tend to rise, a lump sum often does even better. The real benefit is discipline: you keep investing through bear markets instead of waiting for the perfect moment.

Example: you invest 100 euros twice, once at 50 euros and once at 100 euros per unit. You get 3 units for 200 euros, an average of 66.67 euros instead of 75 euros. Try it in the savings plan calculator and read the topic on investing at an all-time high.