Does It Pay to Invest Little by Little?
Just as walking is about putting one foot in front of the other, so successful stock investing is equally simple. All you have to do is sock away one dollar after another.
This robotic strategy not only forces you to save regularly, but also takes a lot of the anxiety out of investing.
Indeed, with all the nervousness about which way stocks are headed next, investing a little money every month seems like a great strategy.
But is this really a sensible way to buy stocks? It's a matter of much debate.
Reducing Cost
The strategy of regularly investing a fixed dollar amount is known as dollar-cost averaging, a reference to its mathematical justification.
Suppose you buy a stock in two $1,000 installments.
Your first $1,000 buys 10 shares at $100 apiece. The stock then plunges to $50, so your second $1,000 purchases 20 shares. After that, the shares rebound to $75, halfway between your two purchase prices.
At first blush, it might seem like you have broken even.
But in fact, at $75, the 30 shares you acquired would be worth $2,250, comfortably above your $2,000 cost.
To understand how this gain was generated, recall that dollar-cost averaging involves investing a fixed dollar amount. That means you buy more shares when the market declines. This sharply reduces your cost per share, thus helping you to turn a profit, even if the market only partially rebounds.
Mathematical magic? Hardly. If you want to see dazzling performance, try boosting your monthly investment when share prices sink. That should lead to even better results.
On the other hand, if you aimed to buy a fixed number of shares every month, rather than investing a fixed dollar amount, regular investing wouldn't seem nearly so clever.
Reducing Risk
Proponents of dollar-cost averaging don't just dwell on the purported mathematical advantages. They also note that the strategy reduces risk, because you avoid the danger of investing a big sum just before a stock-market crash.
But as finance professor Moshe Milevsky notes in his book "The Probability of Fortune," this risk reduction comes at a cost. Stocks rise over time, so you will usually get better results by investing your money right away.
Moreover, Prof. Milevsky argues that using dollar-cost averaging to reduce risk is "contradictory behavior." With this pot of money, your goal is to invest 100% in stocks for the long haul, and yet you are also fretting about short-term volatility. His contention: Instead of messing around with dollar-cost averaging, you should gauge your risk tolerance and then immediately allocate your money among an appropriate mix of stocks and conservative investments.
Prof. Milevsky makes some good points. But for many folks, they are irrelevant.
Sure, if you just won the lottery or you just came into an inheritance, you might have the choice of investing gradually or investing all at once.
But most of us don't have that choice. Instead, we invest gradually, because that's how we get paid. When we get our paycheck, we carve out a few bucks and send them off to our favorite mutual fund. The experts might call this dollar-cost averaging. But oftentimes, it's simple necessity.
Reducing Regret
Necessity or not, spooning money into the market turns out to be a pretty good strategy. But the advantages are largely psychological.
"What you're getting is real peace of mind, which is what the game is all about," contends William Bernstein, an investment adviser in North Bend, Ore. "If you don't have the confidence to proceed [with stock investing], you don't proceed. Dollar-cost averaging gives you the confidence."
But this increased confidence doesn't come from reduced risk. Instead, dollar-cost averaging is about reducing regret, argues Meir Statman, a finance professor at Santa Clara University in California.
If we tossed a bunch of money into stocks and the market then tanked, we wouldn't merely lose money. We would also feel just terrible.
Are we really so focused on avoiding regret? You better believe it. After all, we don't just buy stocks slowly. We also sell slowly.
If we were truly intent on reducing risk, however, we wouldn't bail out gradually.
Instead, we would sell all our stocks right away. But that leaves open the possibility that we would sell everything, only to see stocks rocket higher. And that, of course, would trigger all kinds of anguish.
Indeed, dollar-cost averaging allows us to face market swings with far greater equanimity. When the market goes up, we feel richer. When it goes down, we have the comfort of knowing our next investment will buy shares at a cheaper price.
"It is the psychological solace that counts in dollar-cost averaging," Prof. Statman says. "It is about self-control and shedding responsibility."
Shedding responsibility? Let's say you invested $100 on Tuesday, as part of your regular investment program, only to see stocks dive on Wednesday. Because you were simply following your investment plan, this loss wouldn't seem quite so painful.
Dollar-cost averaging has one other advantage. It allows you to buy into mutual funds without forking over a lot of money. Today, many funds demand an initial investment of $2,500 or more.
But you can get that minimum waived at no-load fund companies such as Baltimore's T. Rowe Price Associates, New York's TIAA-CREF and San Antonio's USAA Investment Management.
The catch: You have to agree to invest, say, $50 every month through an automatic investment plan, where the money is yanked out of your bank account and invested directly in the funds you choose.
Mutual funds are an ideal vehicle for this dollar-cost averaging, because you can be reasonably confident you will earn decent returns over time.
By contrast, I wouldn't dollar-cost average into an individual stock. There's a risk you will regularly throw money at a stock that heads down -- and then keeps on falling.
按部就班的投资妙策
如同走路要一步一步往前迈一样，成功的股票投资其实也很简单。你所需要做的，只是按部就班地存钱。
这种机械的策略不仅逼著你定期存钱，而且还帮你避免了投资中诸多令人焦虑的问题。
的确，由于动荡不定的股市令我们忐忑不安，每月投入一点点钱看来似乎是个绝妙的策略。
但是，这真的是股票投资的一条明路吗？对于这个问题仍存在颇多争议。
降低成本
这种定期定额投资的策略被称为成本平均法，这是根据其数学原理得出的说法。
假设你以每次1,000美元的资金对一只股票作了两笔投资。
第一次，你用1,000美元以每股100美元的价格买入了10股。该股股价随即暴跌至50美元，因而你第二次用1,000美元买进了20股。此后，该股反弹至75美元，介于你两次买入价的正中间。
乍看上去，你似乎既没赔钱，也没赚钱。
而实际，在75美元的股价上，你所买进的30股股票价值将是2,250美元，轻松超出了你2,000美元的成本。
要理解这种收益的产生过程，别忘了成本平均法要求进行定额投资，意味著你在市场滑坡时买入了更多的股票。这就大大降低了你的每股成本，从而帮助你实现赢利，即便在市场只发生局部反弹的情况下也是如此。
这是数学魔术吗？完全不是。如果你希望看到炫目的表现，在股价萎缩时试著提高每月的投资，这样会收到更理想的效果。
另一方面，如果你的目标是每月买进特定数量而不是特定金额的股票，按部就班的投资就算不上多么巧妙的策略了。
降低风险
成本平均法的支持者并不只是一味从数学角度强调它的好处。他们还指出，这一策略降低了风险，让投资者避免了股市暴跌前投入大笔资金的危险。
但是，正如金融学教授摩西?米列夫斯基(Moshe Milevsky)在其著作《财富的可能性》(The Probability of Fortune)中指出的：“这种风险的降低是有代价的。股票随著时间的推移升值，因此你如果立即投资，往往会有更好的收效。”
而且米列夫斯基教授还强调，利用成本平均法降低风险是一种“矛盾的做法”。你的目标将手中这笔钱100%投入股票进行长期投资，但你可能还要为短期波动担惊受怕。他的观点是：与其在成本平均法上浪费时间，不如估量一下自己的风险承受力，之后立即将资金在适量的股票组合与保守投资之间进行分配。
米列夫斯基教授的主张不无道理，但对许多人来说却不切实际。
的确，如果你刚刚买彩票中了大奖或是继承了一笔遗产，你有可能会在渐进式投资和一次性投资作出选择。
但是，我们当中大多数人无可选择。我们只能渐进地投资，因为我们的薪水就是定期发的。当拿到工资时，我们取出一点钱投入自己最喜爱的共同基金。专家可能把这种做法称为成本平均法，但这对我们来说往往只是必需的。
少些遗憾
无论是否作为必需，渐进式的投资都被证实是一种相当好的策略。但它的好处很大程度上在于心理安慰作用。
俄勒冈州North Bend的投资顾问威廉?伯恩斯坦(William Bernstein)表示：“你获得的是心灵的安宁，这就是该策略的全部意义所在。如果你对继续投资股票失去信心，那你就无法进行下去。而成本平均法正是给你这种信心。”
但是，信心的提升并非来自风险的降低。加州圣克拉拉大学(Santa Clara Univerisity)的金融学教授迈尔?斯塔特曼(Meir Statman)声称，成本平均法的意义在于减少一些遗憾。
如果我们把一大笔钱投入股市，市场随后暴跌，我们不仅遭受了金钱上的损失，还会感到悔恨交加。
我们真把避免吃后悔药看得那么重吗？你还是相信为好。毕竟我们不仅要慢慢买入股票，还要慢慢卖出。
但如果我们真的想降低风险，就不会一点点卖出，而是会将手里所有的股票全盘抛出，但此后又可能看到股票直线上涨。果真如此，我们又会无限懊恼。
的确，成本平均法让我们在面对市场波动时能更加心平气和。当市场走高时，我们觉得自己赚钱了。市场走低时，我们同样感到安慰，因为知道下一次将会以较低的价格买入。
斯塔特曼教授说：“成本平均法的真正价值，在于它的心理安慰作用，在于自我控制和放下包袱。”
放下包袱？假如你周二投入100美元作为常规投资计划的一部份，而周三股市就暴跌了。但由于你只不过是按照自己的投资计划操作的，这一损失不会让你感到过于自责。
成本平均法还有一个好处，那就是它让你能够买进共同基金而无需支出一大笔钱。如今，许多基金规定初次投资至少为2,500美元。但通过巴尔的摩的T. Rowe Price Associates，纽约的TIAA-CREF和圣安东尼奥的USAA Investment Management等基金公司，你可以免除该初始投资资金要求。
条件是：你必需同意按照一个自动投资计划每月进行一次投资，比如每月50美元，这样每月钱会从你的银行帐户直接转到你选择的基金里。
对于成本平均法来说，共同基金是最理想的投资工具，因为你完全可以充满信心地认为，随著时间的推移，自己将获得良好的回报。
比较而言，我不会将成本平均法应用在某一只股票上。其风险在于，你可能定期对一只下跌的股票进行投资，但这只股票可能会跌跌不休。
