Monthly Investment Strategy

I've had numerous questions over the past few months on how I go about investing my ongoing monthly provident fund contributions.

It has been proven over time that of the 3 investment options (cash, bonds, stocks), in the end stocks ultimately outperform both the other 2 asset classes and also inflation. As such, my personal strategy is to maintain a 100% stock purchase program monthly (divided equally amongst the 3 equity funds we have available in our A/B accounts) irrespective of the current market conditions.

Maintaining a constant purchase strategy allows me to purchase units at a lower cost when the market is in decline (think of the units as being "on sale") and therefore accumulate additional units. When the market is doing well I purchase lessor units monthly. This concept is called "dollar cost averaging" and allows over time an accumulation strategy that gives you a fairly reasonable price/unit measured over time. This also makes things simpler as you don't have to worry about investment choices; only positioning of current positions to protect your capital gains based upon technical indicators.