What is dollar cost averaging?

Instead of purchasing shares at a single price point, with dollar cost averaging you buy in smaller amounts at regular intervals, regardless of price. When investors purchase securities over time at regular intervals, they decrease the risk of paying too much before market prices drop. Prices don’t only move one way, of course.

What is dollar-cost averaging?

Dollar-cost averaging is a strategy that can make it easier to deal with uncertain markets by making purchases automatic. It also supports an investor's effort to invest regularly. Dollar-cost averaging involves investing the same amount of money in a target security at regular intervals over a certain period of time, regardless of price.

Is dollar cost averaging a good investment?

According to research by Charles Schwab, investors who tried to time the market saw drastically less gains than those who regularly invested with dollar cost averaging. From a practical standpoint, dollar cost averaging helps you begin investing with small amounts of money.