GlossaryBeginner
Dollar-Cost Averaging
Investing a fixed amount at regular intervals instead of all at once.
Dollar-cost averaging, or DCA, is a strategy of investing a fixed amount of money at regular intervals over time, rather than investing a single lump sum all at once.
This approach spreads purchases across many different prices, which can reduce the impact of any single purchase happening at an especially high or low point, though it doesn't guarantee a better outcome than a lump sum.
Examples
- Investing a fixed amount every month, regardless of the current price, is a common dollar-cost averaging approach.
- Dollar-cost averaging is a mechanical strategy, not a prediction about future prices.