Dollar Cost Averaging (DCA)
Dollar Cost Averaging (DCA) is an ivnestment strategy where you invest a fixed amount of money at regular intervals, no matter what the share price is at the time.
Quick Reference:
Regular fixed investments Reduces timing risk long term strategy
Expanded Explanation:
DCA smooths out the ups and downs of the market by spreading your investments over time. For example, investing $500 every month into the same stock or ETF means you’ll sometimes buy at high prices and sometimes at low prices, but your average cost balances out. This removes the stress of trying to “pick the right time” to invest.
For beginners, Dollar Cost Averaging is popular because it’s simple, automatic, and helps build wealth steadily. OVer many years, it also takes advantage of compounding, as reinvested dividends add to the growing investment base.