Dollar-cost averaging (DCA)
Dollar-cost averaging (DCA) is an investment strategy where an investor regularly invests a fixed amount of money in a particular asset over a long period. It is called “dollar-cost” averaging because the investor invests a fixed dollar amount and buys more shares when prices are low and fewer shares when prices are high.
DCA is a disciplined and systematic approach that helps investors in avoiding the influence of market volatility on investments. DCA allows investors to minimize the risk of investing all their money at once.
In a nutshell, DCA is an investment method that helps investors to invest regularly and consistently, regardless of whether the market is up or down. This way, investors can take advantage of the long-term growth potential of the asset and create a diversified portfolio over time.