Three years ago, I bought a motorcycle amounting to Php 160,000.00. I had it financed for 36 months with a monthly amortization of Php 6,675.00.

It was the happiest day of my life knowing that I now own a brand new Honda CBR150R Sportbike.

Back then I didn’t know about stock market investing until recently. I thought to myself what if I didn’t buy my motorcycle but instead invested the money that will be used to pay the monthly amortization to my loan to a certain company listed in the stock market?

I did a historical research and I decided to choose Ayala Land Inc. (ALI) as the company I wanted to invest. I plotted ALI’s stock price on a monthly basis for 35 months and here’s what I found out;

Fig. 1 Peso Cost Averaging Chart

To briefly explain this chart, it shows that every month, I’m investing the Php 6,675.00/month to ALI to buying its shares.

For example, in the first line, I bought 295 shares priced at Php 22.65 on Aug. 10, 2012. As the months pass, the chart shows that when the price per share is high, I buy less shares. And when the price per share is low, I buy more shares.

When you get the average cost per share and compare it to the stock’s price for that day, you can see that the risk of loss is being minimized.

Peso Cost Averaging Method

Peso Cost Averaging is setting  a fixed amount of money to buy shares of stock on a regular basis regardless of whether the stock price is high or low.

Going back to the chart, the share price of ALI on June 5, 2015 is Php 38.80 and the average cost per share is Php 29.70. That’s Php 9.10 profit per share. If I decided to close my position on that day, that would be Php 71,591.80. That’s 31% gain in 3 years or 10.33% gain per year.

Not bad right?

But of course, this is historical data. No one will know what would be the future price of ALI today if you decided to invest 3 years ago. The price may rise, but it can also crash down. No one really knows. Past performance is no guarantee for future returns.

COL Easy Investment Program

There’s an automated way on how to do the Peso Cost Averaging method. COL EIP or Easy Investment Program allows you to set a fixed amount to buy shares of your chosen company. A detailed guide can be downloaded here.

You just need to top up your account every month and let the EIP do its job of investing your money automatically.

More details can be found here.

Final Thoughts

If I had practiced “delayed gratification” 3 years ago, I should have enough money to buy my motorcycle now and still have money left in my equity.

If you are looking for reasons to invest, this example might help you understand what you are missing and realize the future potential value of your money once invested in the long-term.

By using COL EIP, you’ll never have to worry about buying stocks. EIP provides you an easy way of automating your investing activities so that you can focus more on other areas of your life.

Happy investing!