Dollar-Cost Averaging
InvestingInvesting a fixed amount at regular intervals regardless of price, reducing the impact of market volatility.
Example
Example: You invest $500/month in an S&P 500 index fund regardless of market conditions. In January the price is $50/share (you buy 10). In February it drops to $40 (you buy 12.5). In March it recovers to $45 (you buy 11.1). Your average cost: $44.44/share — better than the average price of $45. DCA automatically buys more shares when prices are low.