Dollar-Cost Averaging Crypto in NZ
What dollar-cost averaging is, its trade-offs and how to set up regular NZD crypto purchases.
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The short answer
- Dollar-cost averaging means buying a fixed NZD amount of crypto on a regular schedule, such as weekly or monthly, instead of investing everything at once.
- It spreads your purchases across different prices but does not remove the risk of loss or guarantee a better result than a single purchase, and with Flow you can automate it with a recurring-purchase plan from NZ$50 per payment.
On this page
How dollar-cost averaging works, permalink
With dollar-cost averaging you choose an amount and a schedule and keep to them. When the price is lower, your fixed amount buys more crypto; when it is higher, it buys less. Over time your average cost reflects all the prices you bought at.
The main benefit is behavioural: you do not have to pick a single moment to buy, and a plan can make it easier to stick to an amount you can afford rather than reacting to price moves.
A worked example, permalink
This example uses made-up prices to show the arithmetic of buying NZ$100 of Bitcoin each month for three months, before fees.
| Month | NZ$100 buys |
|---|---|
| Month 1 at NZ$100,000 per BTC | 0.00100 BTC |
| Month 2 at NZ$80,000 per BTC | 0.00125 BTC |
| Month 3 at NZ$125,000 per BTC | 0.00080 BTC |
| Total for NZ$300 | 0.00305 BTC, an average of about NZ$98,361 per BTC |
Dollar-cost averaging or a single purchase?, permalink
- A single purchase puts all your money in at one price. If the price rises afterwards you benefit fully; if it falls you carry the full drop.
- Dollar-cost averaging spreads that timing risk across many purchases, but money waiting to be invested is not exposed to any rise in the meantime.
- Neither approach makes crypto less risky. The total you put in is still exposed to the price of the asset you buy.
Costs to watch on regular buys, permalink
Each recurring purchase with Flow is bought and sent to your wallet separately. Flow's 0.79% fee, including GST, scales with the amount, but each purchase also has a network cost for sending the crypto to your wallet.
A fixed network cost weighs more on smaller purchases. Using the example network fee from Flow's fees page, NZ$1.50 is 3% of a NZ$50 purchase but 0.75% of a NZ$200 purchase. Choosing a less frequent schedule with a larger amount can reduce the share lost to network costs.
Set up a recurring purchase with Flow, permalink
- Verify your Flow account. Identity verification must be complete before you can create a plan.
- Open Auto Buy in your dashboard and choose the asset, a weekly, fortnightly or monthly schedule and the NZD amount, from NZ$50 per payment.
- Enter the wallet address and network the crypto should be sent to. A plan's destination is fixed when it is created, so to change wallets you create a new plan.
- Copy the plan's recipient account details and its unique payment reference.
- Create a matching standing order in your own internet banking with the same amount, schedule and reference.
Pause, change or stop a plan, permalink
You can pause and resume a plan, or cancel it, from Auto Buy in your dashboard. To change the wallet, schedule or amount, cancel the plan and create a new one with its own payment reference.
Flow cannot change your bank's standing order. Whenever you pause, cancel or replace a plan, update or cancel the standing order in your banking too, so payments do not keep arriving for a plan that is no longer active.
Records and tax, permalink
Every recurring purchase is a separate acquisition with its own date, price and NZD cost, which matters when you later sell or swap. Flow's dashboard can export a CSV summary of your Flow activity for a New Zealand tax year, with gain and loss estimates using FIFO.