WHAT IS DOLLAR-COST AVERAGING AND 4 REASONS NOT TO USE IT
Dollar-cost averaging is an intelligent way to invest no matter how much money you have.
Dollar-cost averaging (DCA) is a method for investing where an investor makes regular purchases of a target asset at set intervals, regardless of price, to lessen the impact of volatility.
Investors buy more shares when the price per share drops below what they paid for them.
Dollar-Cost Averaging Example
Dollar-cost averaging is a way to buy stocks at a fixed schedule but at different prices. It enables an investor to buy shares at an average price rather than a fixed price.
How Dollar-Cost Averaging Works
First, dollar-cost averaging works only if you are willing to
invest, whether the stock prices are low or high
If the market continues to rise, the investor will make a profit on the purchase made in the second month.
Let’s take a look at the following three market scenarios:
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