Dollar-Cost Averaging

Dollar-cost averaging (DCA) means investing a fixed sum at regular intervals—say, a set amount every month—regardless of whether prices are high or low. When prices fall, your fixed amount buys more units; when prices rise, it buys fewer. Over time, this averages out your cost per unit to something lower than if you had invested everything at a price peak.

The main benefit of DCA is psychological as much as financial. It removes the paralysing question of "when is the right time to invest?" There is no need to predict market highs and lows—you simply invest consistently, and time does the work.

DCA is especially well-suited for long-term goals like retirement or education savings, where contributions are made regularly from income. It pairs naturally with automatic investment plans offered by most brokers and pension providers.