What Are the Advantages of Dollar Cost Averaging?
When markets get a little too volatile for your liking, it may be a particularly good time to adopt a disciplined investing approach. As opposed to “right-brain” investing, when you might act mainly out of instinct, a disciplined approach is a pre-set investing pattern that you commit to follow. It may not be as much fun as acting out of intuition. And it may involve digesting some pride. But disciplined investing could help keep you out of trouble, and even position you well in the market. Deciding on Dollar Cost Averaging Instead of trying to guess market highs and lows — a feat no one has ever really mastered — why not invest the same amount of money at regular intervals over a lengthy period of time? For example, let’s say you set aside $200 every month to invest in a mutual fund. The first month, your fund sells for $10 per share, and you pick up 20 shares. By the next month, the market’s down, the fund drops to $9 per share, and you buy 22.2 shares. The next go round, the market
