What does dollar-cost averaging involve?

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of market conditions. This approach helps mitigate the effects of market volatility on the overall investment. By consistently investing a set amount, investors purchase more shares when prices are low and fewer shares when prices are high. This can lead to a lower average cost per share over time, as it smooths out the impact of fluctuations in the market.

This strategy is particularly beneficial for individuals who may not have extensive investment knowledge or who prefer a disciplined approach to investing. It encourages regular saving and investing, and it can reduce the emotional stress associated with trying to time the market. By focusing on a consistent investment routine, investors can potentially build wealth over the long term without attempting to predict market movements.