Smoothing Out the Ride: An Intro to Dollar-Cost Averaging

Investing can be exciting, but it can also feel risky. Dollar-cost averaging (DCA) is a strategy designed to help you manage that risk.
Imagine you have some money to invest, but you're worried about the stock market going up and down. DCA lets you invest a fixed amount of money at regular intervals, regardless of the price. This way, you buy more shares when prices are low and fewer shares when prices are high. Over time, this can help you lower your average cost per share.
Here's a simple example: Say you invest $100 every month into a mutual fund. In some months, the price per share might be high, and you'll buy fewer shares. In other months, the price might be low, and you'll buy more shares. This automatic investing takes the guesswork out of timing the market, which can be nearly impossible to do consistently.
DCA offers several benefits:

• Reduces risk: By averaging out your purchase price, you're less likely to invest a large sum right before a market downturn.
• Disciplined investing: DCA encourages consistent investing, which is key to building wealth over time.
• Lowers stress: You don't have to worry about picking the perfect moment to invest.

DCA isn't a guaranteed path to riches, but it's a solid strategy for long-term investors who want to ride out market ups and downs.
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