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Which one is a better option while investing in mutual funds? I think that investment via VIP would work only if the investment is target oriented, and if calculated manually.

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Both options are meant for specific purpose. It depends why you are saving.

Cost Averaging is useful to build a wealth if you want to invest a fixed amount every month and servers good to spread the risk.

Value Cost Averaging is Goal oriented ... The key reason being that normally one looks at investing to arrive at a goal. i.e. I need to invest Rs 5000/- for next 2 years to make it 1,50,000/- so that one can go on a vacation or down payment of a Car or whatever reason. Now if inspite of investing regularly you are not meeting a specified goal. then its better to use the Value Cost Averaging, the amount you invest goes up or down based on the returns.

There are financial institutions that offer Value Cost Averaging so you need not worry about calculation.

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http://www.hullfinancialplanning.com/value-cost-averaging-or-dollar-cost-averaging/

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  • Although the term Rupee is used, in US it would be Dollar Cost Averaging etc
    – Dheer
    Apr 5, 2014 at 10:51

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