Dollar-Cost Averaging
Investing a fixed amount on a regular schedule regardless of price, smoothing out market timing.
Dollar-cost averaging means investing a set amount at regular intervals — say every paycheck — no matter what the market is doing. When prices are low your fixed dollars buy more shares; when high, fewer. It removes the temptation to time the market and turns investing into an automatic habit.
It's how most people invest through a 401(k) without thinking about it. Research shows that investing a lump sum immediately tends to beat averaging it in, on average, because markets rise more often than they fall — but dollar-cost averaging wins on behavior, keeping you consistently invested through volatility instead of waiting for a 'better' moment that may never come.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.