Dollar Cost Averaging | Investor's Almanac

Dollar Cost Averaging (DCA) is a systematic investment strategy where a fixed amount of money is invested at regular intervals, regardless of market conditions. This approach aims to reduce the impact of volatility by averaging the purchase price of an asset over time. Instead of trying to time the market, DCA investors buy more shares when prices are low and fewer when prices are high, potentially leading to a lower average cost per share than a lump-sum investment. It's a disciplined, long-term approach favored by many individual investors for its simplicity and psychological benefits, helping to mitigate the emotional toll of market fluctuations. While it may not capture the absolute lowest entry point, DCA offers a consistent path to building wealth over the long haul.