What Is Dollar-Cost Averaging? Meaning & Example
Definition
Dollar-cost averaging means investing a fixed amount at regular intervals regardless of price. It reduces timing stress and builds a consistent habit.
Related terms
An index fund aims to match the performance of a market index by holding the same securities. It is typically low cost and widely used for passive investing.
VolatilityVolatility measures how much and how quickly prices move. Higher volatility means bigger swings, which bring both more opportunity and more risk.
Compound InterestCompound interest is interest earned on both your original money and the interest already added to it. Over long periods it can make savings grow much faster than simple interest.
What is Dollar-Cost Averaging?
Dollar-cost averaging means investing a fixed amount at regular intervals regardless of price. It reduces timing stress and builds a consistent habit.
Can you give an example of Dollar-Cost Averaging?
Investing $150 every month means buying more units when prices are low and fewer when they are high.