3 min read

Auto-Invest with baraka

Eliminate the hassle of manually investing and the emotional strain of timing your investments.

Baraka is excited to announce the launch of Auto-investments, enabling a convenient, seamless approach to put your investments on auto-pilot.

“Time In The Market”

It is frequently said that “time in the market” is often a more effective approach than “timing the market”, and one of the most common pitfalls for investors new to the markets is the concern about when is the best time to act. Setting up recurring and auto-investments on a frequent time basis i.e. weekly or monthly reinforces the tried and tested philosophy of Dollar Cost Averaging.

Auto-Invest

What is Dollar Cost Averaging?

Dollar-cost-averaging (DCA) is a passive investment strategy that aims to reduce your exposure to timing risk and speculation of particular asset prices. baraka investors can now automate equal investments at regular intervals on a consistent basis, irrespective of the price and market conditions.

Key Takeaways

  • The Approach of DCA adopts a passive and long term
  • Systematically invest equal amounts, spaced out over regular intervals, irrespective of price.
  • The goal of dollar-cost averaging is to reduce the overall exposure of volatility on the price of the target asset.
  • Dollar-cost averaging aims to avoid poorly-timed investing decisions.

Making regular contributions ensures you’re on the right track long term

Using this feature will ensure you stick to the plan without second-guessing your decisions or having your psychological biases and emotions interfering with your long term strategy.

“The psychological mood of people changes more drastically than anything else in Finance” – Benjamin Graham.

Setting up your Auto-Investment is simple and convenient

(check out our tutorial video)

  1. Select the desired stock or fund you wish to invest in – i.e. Netflix Stock (NFLX).
  2. Determine the amount you wish to invest on a recurring basis – i.e. USD6000 to be invested.
  3. Schedule the time frequency of your investments i.e. monthly.
  4. Confirm your strategy and you’re done!

Auto-Invest

How would DCA look in this example?

Let’s imagine that you commited to buying 500 USD in Netflix stock over the last 12 months at the first day of market open of every month:

Date Investment Price per Share ($)
(Market Open)
Number of Shares
1 June 2021
500 USD 499.08 0.998 shares
1 July 2021
500 USD 533.54 0.937 shares
2 August 2021
500 USD 515.15 0.971 shares
1 September 2021
500 USD 582.07 0.859 shares
1 October 2021
500 USD 613.15 0.815 shares
1 November 2021
500 USD 681.17 0.734 shares
1 December 2021
500 USD 617.77 0.809 shares
3 January 2022
500 USD 597.37 0.837 shares
1 February 2021
500 USD 457.13 1.094 shares
1 March 2022
500 USD 386.24 1.295 shares
1 April 2022
500 USD 373.47 1.339 shares
2 May 2022
500 USD 199.46 2.5 shares

Average Price per share: US$454.9591

As demonstrated, investing through a DCA approach yields a lower share price rather than investing in a lump sum at the start of the year (US $454.96 rather than US $499.08). Furthermore, this approach would allow the investor to purchase a total of 13.19 shares rather than just 12.02 shares.

Regulated by the DFSA.

Past performance is no guarantee of future results. Your investment can fluctuate, so you may get back less than you invested. Consider each product’s risk(s) before investing. Baraka is not a financial adviser and therefore does not provide financial advice. Our content is informational only.

Iman Haider
3 min read