Capital Accumulation Plan
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Discover the best way to enter a market and limit the risk associated with volatility. The Capital Accumulation Plan or Dollar Cost Average as already introduced by Benjamin Graham.
What is a Capital Accumulation Plan?
A Capital Accumulation Plan is a strategy that consists of making small, constant contributions over time in the purchase of an asset, thereby diluting the risks derived from volatility.
What we do is average the price with each purchase.
What assets are ideal for a Capital Accumulation Plan?
Look for assets (stocks, indices, commodities) that have good fundamentals and that have always appreciated over time.
We will avoid small and / or illiquid companies that can have a lot of volatility at certain times.
Therefore, we will stay with:
- big enterprises,
- indices that have a lot of liquidity or
- certain raw materials such as Gold and Silver.
Example: Gold Capital Accumulation Plan
Here we see how it would have been a capital accumulation plan in physical gold where we can play with the number of contributions, amount of the contribution and date from when it began.
If you want to replicate this accumulation plan in gold or in precious metals to ensure a good return on your retirement savings, take a look at the Gold Savings Plan Guide