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10 Basic Investing Principles - Principal 10 - Dollar Cost Averaging

10 Basic Investing Principles - Principal 10 - Dollar Cost Averaging

| April 26, 2023

Topic 10: Dollar Cost Averaging

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of market conditions. By investing a fixed amount at regular intervals, you can potentially buy more shares when prices are low and fewer shares when prices are high.

Dollar-cost averaging can be an effective way to manage market volatility and reduce the impact of short-term market movements on your portfolio. It can also help you avoid making impulsive investment decisions based on emotions, such as panic selling during a market downturn.

While dollar-cost averaging can be an effective investment strategy, it's important to remember that it does not guarantee a profit or protect against loss. It's also important to periodically review and adjust your investment strategy as your financial goals and personal situation change.

Working with a financial advisor can help you determine if dollar-cost averaging is right for you and develop a long-term investment plan that is aligned with your financial goals and risk tolerance. By staying disciplined and consistent in your investment approach, you can potentially achieve long-term financial success.

Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.