What Is Dollar-Cost Averaging And 4 Reasons Not To Use It

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Dollar-cost averaging is an intelligent way to invest no matter how much money you have.

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What Is Dollar-Cost Averaging?

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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.

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Dollar-Cost Averaging Example

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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.

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How Dollar-Cost Averaging Works

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To understand dollar-cost averaging, let’s take a look at the following three market scenarios:

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