Dollar-Cost Averaging (DCA): Dollar-Cost Averaging involves investing a fixed amount of money at regular intervals—such as monthly or quarterly—regardless of market conditions. This strategy reduces the impact of volatility by purchasing more shares when prices are low and fewer when prices are high, resulting in a lower average cost per share over time. DCA is especially effective for new investors or those contributing to retirement accounts like 401(k)s. It eliminates the need to time the market and fosters disciplined investing. While it may underperform lump-sum investing in rising markets, DCA provides psychological comfort and risk mitigation, making it a reliable method for consistent wealth accumulation.
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