What is Rupee Cost Averaging?
Rupee cost averaging is the strategy of investing a fixed amount at regular intervals regardless of market conditions — you automatically buy more units when prices are low and fewer when high.
Formula
Average Cost = Total Amount Invested ÷ Total Units Acquired
How to Interpret
RCA through SIPs removes the need to time the market. Over long periods, it smooths out volatility and typically results in a lower average purchase price than lump-sum investing during volatile markets.
Typical Ranges
Most effective over 5+ years in volatile markets. Works best with equity mutual funds or index funds.