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Investing Principles

Dollar Cost Averaging

A Systematic Approach. One of the most important tenets of investing is discipline. Investing strategies that cut down on the ways emotion can enter into the process can be a good idea. When it comes to purchasing securities traded on an open market, a decision to invest a large sum all at once can expose you to the risk of buying at an inopportune time in the market cycle.

To possibly reduce that risk, a technique known as dollar cost averaging combines consistency and discipline into a single strategy.

Dollar cost averaging does not assure a profit or protect against loss in a declining market. It involves continuous investing regardless of fluctuating price levels. Investors should consider their ability to continue investing through periods of fluctuating market conditions.

How Dollar Cost Averaging Works

In the accompanying example, you can see that Dan purchases 10 shares of a stock for a lump sum of $5,000, while Kathy invests her $5,000 over a five-month period in equal installments of $1,000 per month.

By limiting her risk of investing a large sum in a single investment at the wrong time, Kathy's strategy allowed her to buy more shares when the stock price was down, and fewer shares when the stock price was up. As a result, Kathy ends up buying seven more shares than Dan at a lower average price-per-share.

Hypothetical illustration on dollar cost averaging infographic.

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Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your representative or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

Annuities are long-term, tax-deferred vehicles designed for retirement. Variable annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½.

Jackson® and its affiliates do not provide legal, tax or estate-planning advice. For questions about a specific situation, please consult a qualified advisor.

Annuities are issued by Jackson National Life Insurance Company® (Home Office: Lansing, Michigan) and in New York by Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC, member FINRA. May not be available in all states and state variations may apply. These products have limitations and restrictions. Contact Jackson for more information.

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CMN16259 10/19

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