Dollar-Cost Averaging
Investing a fixed dollar amount on a regular schedule (e.g., $500 every month into an S&P 500 index fund) regardless of the price. When prices are low you buy more shares; when prices are high you buy fewer. Best use: automating contributions out of every paycheck so the decision is made once and never re-litigated when markets are scary. Honest caveat: lump-sum investing has historically beaten DCA in roughly two-thirds of rolling periods because markets rise more often than they fall — DCA is a discipline-and-emotional-protection tool, not a return-maximizing strategy. The right framing: DCA is the price you pay for showing up every month without flinching, and for most people that price is worth it.
Lessons that use this term
Related terms
Adjusted Cost Basis · Annuity · Capital Gains Distribution · Capitalized Interest · Cost Basis · Dividend Discount Model (DDM)
Open this term in the app → — no account needed; browse the full glossary while you research.