What Is Dollar-Cost-Averaging

(Is It the Best Way to Invest? )

Dollar-cost-averaging (DCA) is a systematic program of investing equal sums of money at regular intervals regardless of the investment’s price. It’s a simple approach requiring you to determine two parameters: the fixed amount for each period and how often.

Benefits of Dollar-Cost-Averages

Arrow
Floral Pattern
Floral Pattern

#1 Reduces Risk

The DCA approach minimizes risk and is desirable for investors with low-risk tolerance. It automatically buys more shares through downturns and lower prices, decreasing the average share price. 

Buffett advises investors to use a low-cost-average approach and not make all their purchases at once, whether buying shares or index funds.

#2 Investor Discipline

Floral Pattern
Floral Pattern