Dollar-Cost Averaging (DCA)

Dollar-cost averaging (DCA) is an investment method where the investor purchases constant dollar amounts of a certain investment at set intervals. The goal is to mitigate the effect of volatility by dividing an investment into smaller amounts and purchasing at regular intervals. This can minimize the risk of a significant loss if the investor makes a lump sum investment and the market declines. The fixed dollar amount means the investor can buy more shares when prices are low and fewer when prices rise.