What Is Dollar Cost Averaging? A Beginner’s Guide

There’s no shortage of personal finance advice and techniques to follow when it comes to investing. Unfortunately, despite what some of the “market experts” will tell you, there’s no one strategy that will guarantee you massive financial wealth. There are, however, some time-tested investment strategies that can help put you in a position to grow your portfolio with minimal risk.

One such strategy is dollar-cost averaging, an effective way to grow your financial investments while protecting against the risk of significant loss. While it may not be the most growth-focused investment strategy out there, it is incredibly simple to follow and can help set you up for long-term investing success.

In this article, we’ll cover everything you need to know about how dollar-cost averaging works, including its benefits and some examples of it in action.

What is dollar-cost averaging?

Dollar-cost averaging involves investing a sum of money (usually a relatively small amount) into one particular asset at regular intervals.

The entire premise of dollar-cost averaging is not to try and time the market. In a perfect world, you would always be able to purchase a stock or alternative investment at the absolute lowest price possible. We all have a friend or…