Multiple choice

Value averaging means

  1. investing the same amount of funds regularly

  2. investing in one lump sum amount

  3. keeping the target value of investment constant by investing the amount by which the investment value has gone down

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Value averaging is a systematic investment strategy where the investor sets a target portfolio value and invests enough to reach that target. If the portfolio value has gone down due to market decline, more money is invested to bring it back to the target value. This differs from rupee-cost averaging (same amount regularly) or lump-sum investing.

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