Dollar-Cost Averaging

Definition of 'Dollar-Cost Averaging'

An investment strategy by which the fund-holder invests fixed sums over time systematically, without regard to the share price at the time. The idea is that by setting aside a dollar amount, rather than focusing on share price, you end up buying more shares when the price is low and fewer when the price is high.

Truth is, if you have the skill, and luck, to market time, you're probably better off trying to market time. But few have the skill and luck, so dollar-cost averaging is a next-best strategy.