Dollar-cost averaging invests a fixed cash amount each period. Value averaging targets a rising portfolio path and invests more after declines, less after rallies. The second can be powerful—and operationally annoying.
Method comparison
| Factor | DCA / fixed SIP | Value averaging |
|---|---|---|
| Cash need | Predictable | Variable—can spike in drawdowns |
| Behavioral load | Low | Higher |
| Automation | Excellent | Harder on retail platforms |
| Best for | Most households | Investors with flexible cash reserves |
Conclusion
Complexity is not a virtue. For most Tier-1 investors, a fixed recurring buy into a sensible allocation beats elegant formulas they abandon mid-crash.