Time Value of Money

• How much did you spend?

• Total is $300 ($100 each month for 3 months)

• How many shares do you own?

• Total of 19 (Month 1 = 100/10=10, Month 2 = 100/20=5, Month 3=100/25=4)

• $300/19 = $15.8

• Buying same amount = habit so will keep doing it, gets rid of trying to 'time' the market, and protects from price drops since buy more when cheap = lowering your average price per share and making it not need to rise as much to gain your money back (if lost some)

​Assume 1 share bought at each price

​10+20+25 = 55

​Average over 3 months: 55 / 3 = $18.33

​

​This is what the news will report as the investment's average price

Start with $10

Ended with $15

15-10=5

$5 Gain

$5/$10 =.5

.5*100=50%