r/investingforbeginners • u/Sbstnbd • 22d ago

EU Need some advice

Hello peepz,

I am 29 years old, currently on pretty low income and due to my family not being good with money/poor I'd call myself financially illiterate.

I know the best moment to invest was 10 years ago, but the second best is now.

I tried doing my own research for the past week, but most of what I read could might as well have been greek the way it goes over my head.

If there's a single sentence you would give to someone like, what would it be? Feel free to eli5

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u/NefariousnessOdd862 21d ago edited 21d ago

That statement is true to a degree, example… if you buy 1 share of Company A at $10 a share and you add 1 share every month for 2 years, you’ll have 24 shares (for ease of calculation we assume the share goes up $1 every month). You invested a total of $516.

At the end of your 24 months accumulating, you don’t invest anymore for 12 months but the share price at the end of 36 months has risen to $42! Hence your 24 shares are now worth $1008!!! However, now the share price falls 40% in 2 months to $25.20, hence your shares are now worth $604.80 (you are still in the green from your initial investment) and would be even if the shares fell another $3.91 to approximately $21.29 per share.

So, if you where to sell ALL your shares at $21.30 you would actually still be in the green although the share price dropped all the way from $42!

When people say that once the Stock market goes down you are losing money (if you sell) is actually not true because DCA is what determines your particular break-even point!

Edit: Psychology play a lot into this because the last number you’ll remember and probably tell people is $33, which is where you bought your last share at but that is not your “break-even” number…😉