Ruppe Cost averaging refers to investing specific amount of ruppes at regular intervals for over a period of time. This method reduces the risk of falling or gaining prices and is an efficent way to build your portfolio over time. Assume that you invest Rs 120,000 in bitcoin which was trading at Rs 45,000 for 1 BTC. Hence, you get 2.67 bitcoins. Suppose after 12 months, the price increased to Rs 56,000 and you decide to sell. You will thus get a profit of Rs 29,520 and your ROI will be 20%. If you do RCA, you’ll invest Rs 10,000 every month into bitcoins irrespective of the price at that time. Fundamentally, you will get fewer bitcoins when the price will rise and more when the price will fall. In this case, at the end of 12 months, you will have 2.96 bitcoins. And you decide to sell at Rs 56,000, your profit will stand at Rs 45,760 with ROI of 28%. This means with RCA method, you end up with 8% more profit than investing at one go!
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