Buying in Thirds

Buying in Thirds refers to an investment strategy where an investor purchases an Asset in three separate transactions, typically to manage risk and Capitalize on price fluctuations. This method allows the investor to spread out their entry points, potentially averaging the cost over time.

Example 1: An investor wants to buy Shares of Company A, currently priced at $90. They decide to buy in thirds by making three purchases: the first purchase of 10 Shares at $90, the second purchase of 10 Shares at $85, and the third purchase of 10 Shares at $80. This approach results in an average purchase price of $85.

Example 2: A real estate investor is interested in a property listed at $300,000. Instead of buying the property outright, they make an offer to buy it in thirds over six months: $100,000 now, another $100,000 in three months, and the final $100,000 in six months. This strategy allows the investor to evaluate the property’s performance before committing the full amount.

Case: During market volatility, an investor might use buying in thirds to gradually enter the market. For instance, if a Stock drops from $150 to $120, they might purchase one-third at $120, another third at $110, and the last third at $100, which helps mitigate the risk of buying all at once in a declining market.