Question
What is Dollar Cost Averaging?
Answer
Dollar cost averaging (DCA) is an investment strategy that involves investing of equal monetary amounts regularly and periodically over specific time periods in a particular investment or portfolio. By doing so, more shares are purchased when prices are low and fewer shares are purchased when prices are high. The point of this is to lower the total average cost per share of the investment, giving the investor a lower overall cost for the shares purchased over time.
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