What is dollar-cost averaging? Dollar Cost Averaging

Dollar Cost Averaging in English, or DCA for short, is what people often call "fixed investment" and is an investment strategy that refers to periodic quantification. Among them, regular refers to a specific cycle, such as once every two weeks, once a month, etc. Quantity refers to a specific amount, such as $50, $100, $1,000, etc. per time. For example, take the average cost method divided into 10 installments of $1,000 each time, that is, the original one-time investment of $10,000 is divided into 10 equal payments, with only $1,000 being paid each time. If you hold a 401(k) account, etc., you already have this investment strategy by default. The investment advantage of the average-cost method is to minimize investment risks. Especially when the stock price fluctuates significantly, it is difficult for investors to identify an excellent buying point. If you choose the average-cost method to invest, the impact of stock price fluctuations on earnings will be evenly shared, thereby reducing the amount of losses. At the same time, the psychological burden caused by stock price fluctuations on investors will also be greatly reduced. However, while reducing the level of losses, the average cost method will also reduce the level of profits, which is one of the biggest drawbacks of the average cost method.