There are several ways to invest in investment funds. You can invest a large sum of money at once, if you already have it, and wait at least a year, or better still, at least three years. You can also invest money randomly, depending on when you have it and how much you have.
In my opinion, the best investment strategy is to invest the same amount of money at regular intervals over a number of years. For example, $100 every month or every other month. If you do that, you are using a fairly sophisticated strategy called value averaging.
If we compare the use of this investment strategy in graphs 1 and 2, we can see that Fund 2 made more profit than Fund 1, although this is not shown in the graph because Fund 1 was constantly growing and Fund 2 was lower at the end of the period than at the beginning. This was because as the price fell, more units could be bought for a fixed amount of $100. And although the share price in Fund 2 never returned to its level at the beginning of the year, the total value of the portfolio increased as a result of the shares bought at lower prices.
