● Investing the same dollar amount every month, regardless of market conditions and fluctuating prices.
● This strategy helps to reduce your risk of loss over time. Also, by investing regular amounts as opposed to a lump sum, your average cost per share could potentially be lower. It is often better to embrace volatility over time, rather than trying to avoid it by investing larger lump sums all at once.
● Dollar Cost averaging is what you’re doing when you contribute money to your 401k or 403 b….so it is an important concept to understand
● Take a look at these charts to get a better understanding of dollar cost averaging.