Portfolio
What is Rupee Cost Averaging (RCA) - India?
Rupee Cost Averaging is the Indian term for 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. The US equivalent is Dollar-Cost Averaging (DCA).
Formula
Average Cost = Total Amount Invested ÷ Total Units Acquired
How to Interpret
RCA through SIPs (or DCA in the US through 401(k)/IRA auto-contributions or brokerage recurring buys) 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. See also: Dollar-Cost Averaging (US equivalent).