Savings and InvestmentsMarket Timing, Technical Analysis, and Fundamental Analysis |
What is dollar cost averaging? |
Dollar cost averaging is a simple timing strategy of investing, where an investor buys the same dollar amount of a stock at regular intervals (say, $100 per month of a certain stock). By doing so, the investor may acquire more stock as the price goes down, and less stock if the price rises. This lowers the total average price per share of an investment, meaning the investor is able to invest more profitably than if he or she were to “time the market.”