Dollar-Cost Averaging
Investing a fixed amount on a regular schedule regardless of what the market is doing.
What Dollar-Cost Averaging means
Dollar-cost averaging (DCA) means investing the same amount of money at regular intervals — for example, $200 every month — instead of trying to time the market. Because you buy more shares when prices are low and fewer when they are high, your average purchase price tends to smooth out over time. It removes the pressure of predicting the market and builds a consistent investing habit.
Example
Investing $200 each month for two years buys shares at many different prices. Some months the share price is high, others low — but you never need to guess which month is "right".
Related terms
Disclaimer
Definitions are simplified for educational use and are not personalized financial, investment, tax or legal advice.