ZCA's objective is to assist the investor in answering the question of how to invest in the stock, mutual fund or other security. Once the investor has determined what securities to purchase and when is a good time to open the position, ZCA steps in to assist in the management of the investment. To grasp the significance of how to invest, consider the skills needed to be a good card player. Whether the game is bridge, gin rummy or poker, the strength of the hands dealt to each player will be about the same over the long run. Consequently, the difference between a good player and a poor player depends on how each plays his hand.
Most investors pay little attention to the management of their investments.
The tendency is to purchase their shares in a stock or fund all at once, with no thought given as to when to sell. If they do decide to sell at some later date, usually all of the shares are disposed of in a single transaction. Seldom do investors attempt to adjust their holdings in any strategic manner. It is this void that ZCA is designed to fill. The purpose of zero cost averaging is to provide investors with a systematic approach to the management of their investments.