Cost Average-Effekt: Fakt oder Mythos?

For practitioners, the Cost-Average phenomenon is part of the basic knowledge concerning investment theory. The core effect lies within the possibility to achieve in average a lower acquisition cost compared to the average price of the stock or investment fund. With the regu-lar investment of equal amounts, more shares can be bought, when prices are low and less share are bought, when prices are high. Above this, many practitioners attribute increased significance to the Cost-Average phenomenon, by deducing that savings plans, compared to a lump sum investments, in general reduce the timing risk. In this paper, we theoretically check this rather intuitive conclusion. The main focus is on a specific analysis of risk- and return consequences of investment plans compared to lump sum investments. We find that regarding both the terminal value and the shortfall-probability regarding a nominal capital maintenance investment plans are inferior to lump sum investments. In contrast, with respect to the average amount of loss in case of a loss, the investment plan turns out to be the better strategy.