Glossary · Risk & Strategy
Dollar-cost averaging
Investing fixed amounts at regular intervals.
Dollar-cost averaging (DCA) means investing a set amount on a schedule — every paycheck or every month — regardless of whether prices feel high or low. You buy more shares when prices are down and fewer when prices are up.
DCA does not guarantee better returns than investing a lump sum, but it can reduce timing anxiety and build a consistent habit. It works best paired with diversified holdings and a long horizon.
Example
You invest $200 into the same index ETF on the 1st of every month for a year, whether the ETF is at $40 or $55 that day.