What is Dollar-Cost Averaging ?

1583 reads · Last updated: December 5, 2024

Dollar-Cost Averaging (DCA) is an investment strategy where an investor invests a fixed amount of money into a specific financial asset, such as stocks, mutual funds, or other securities, at regular intervals regardless of the current market price. This method involves buying fewer shares when prices are high and more shares when prices are low, thus averaging out the cost of investments over time and reducing risk. Dollar-cost averaging helps investors avoid the emotional impact of market volatility, allowing them to focus on long-term goals rather than short-term market fluctuations. This strategy is suitable for investors who want to gradually build wealth through consistent investment habits.

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