What is dollar-cost averaging?

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money into a particular investment at regular intervals, regardless of the asset's price. This approach allows investors to accumulate more shares when prices are low and fewer shares when prices are high, thus averaging out the overall cost of the investment over time. The systematic nature of this strategy can help mitigate the impact of market volatility and reduce the risks associated with trying to time the market.

By consistently investing at regular intervals, investors benefit from a disciplined approach, which can lead to better long-term results compared to making irregular or large lump-sum investments. This method is particularly beneficial in volatile markets, where prices fluctuate significantly, as it allows investors to avoid the stress and uncertainty of trying to find the "right" time to buy.