What does dollar cost averaging mean?
Dollar cost averaging is a method of investing which can be used with variable annuities. Instead of trying to time the market by trying to buy when the market is low and sell when the market is high, dollar cost averaging requires that you make investments in smaller amounts at regular intervals. By doing this, you will tend to buy more shares when prices are low and fewer shares when it is high. As a result, over time, the average cost per share may be less than if you had made your investment all at once. However, remember that dollar cost averaging does not assure a profit nor does it protect against a loss in declining markets. You also should consider your financial ability to continue making regular investments through periods of low price levels.
