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I looked with you yesterday at a value averaging system to achieve steady 3% quarterly growth in your investment accounts, stress free! Today, I'll give you a nodding acquaintance with the strategy.

You're probably familiar with dollar-cost averaging, which is just adding the same amount of money to an investment on a steady basis. For instance, you might add $100 per month to an index mutual fund. It works well for a couple of reasons. First, you build a capital base over time and, second, the steady payments automatically buy more shares when the price is cheaper and fewer when the price is more expensive. If the shares are $5 in October, $10 in November, then $8 in December, your $100 would have bought 20 shares in October, 10 in November, and 12.5 in December.

Value averaging asks these questions: Instead of just sending the same amount of money when the price is cheaper, why not send more? Instead of just buying fewer shares when the price is higher, why not buy none or even sell some? Then, the benefits of buying more of the cheaper shares and fewer of the expensive ones will be magnified, right? You bet, and that's what we accomplish with value averaging. We put in place a framework for knowing whether we need to send more money, less money, or even pull money out of the investment to keep it on track to reach our growth rate target. In our example, that target is 3% per quarter.

The beauty of the strategy is that it enables investors to ignore much of the natural volatility of the market but -- even more important to investors these days -- the artificial volatility inflamed by shenanigans of government, banks, and big business. The game has changed a lot in the last two years, with the strokes of pens from the Treasury and the Fed having much more to do with the direction of any stock than the stock's product or marketing plans. In such an environment, which is nearly impossible to forecast, tried-and-true growth rules are invaluable. I hope readers benefit from the ones explained in the 2010 edition, which are presented in "Value Averaging for Steady Growth" on page 110.

The Neatest Little Guide to Stock Market Investing Jason Kelly Investing How-To Stocks Market Finances Wall Street