Whats “Dollar Cost Averaging”?
Dollar cost averaging can be an effective investing method, especially in a volatile market. It’s a practice of buying shares of a stock or mutual fund by investing a certain dollar amount regularly whether the market is up or down. The foundation of this principle is that you buy fewer shares when the investment is doing well and more when the investment is not doing as well. This means that the average share price you pay may be lower than the average share price over time. See the following example, which uses a monthly IRA contribution of $100.
