Should you buy ABCD stock with dollar-cost averaging?

With dollar-cost averaging, you actually have an overall gain at $40 per share of ABCD stock, below where you first started buying the stock. Because you own more shares than in a lump-sum purchase, your investment grows more quickly as the stock’s price goes up, with your total profit at an $80 sale price more than doubled.

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.

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.