Dollar-Cost Averaging
Dollar cost averaging is an investment strategy in which an investor regularly invests a fixed dollar amount into a particular asset—such as stocks or mutual funds—at consistent intervals, regardless of the asset's price at each purchase.
This approach results in buying more shares when prices are low and fewer shares when prices are high, potentially lowering the average cost per share over time and reducing the impact of market volatility.
Dollar cost averaging encourages disciplined, long-term investing and helps investors avoid market-timing decisions and emotional reactions to market swings.
It is commonly used in retirement and automated investment plans, contributing to steady wealth accumulation regardless of market conditions.