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Dollar Cost Averaging: What it is and how to use it
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When it comes to investing, dollar cost averaging is something to be familiar with. It can help you make good investment decisions!
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What is Dollar Cost Averaging?
Dollar-cost-averaging (DCA) is a systematic program of investing equal sums of money at regular intervals regardless of the investment’s price.
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Dollar Cost Averaging
Regular, same price investments force you to ignore the purchase price, and focus instead on just putting in the investment.
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Terrain Map
Benefits of this approach
- Reduce Risk -Create investor discipline - Lower your cost basis (average price per share) - remove emotion from investing
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White Bag
A conservative approach -Possible opportunity costs - May forfeit higher returns
Disadvantages:
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Who Should Do This
For beginner investors, this is a great approach. Also anyone who likes to "set it and forget it" this is a great way to do it!
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