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Dollar-cost averaging is investing a fixed amount of money regularly, regardless of the asset's price, to reduce overall risk.
In Depth
This strategy involves buying a fixed dollar amount of a particular investment on a regular schedule, such as monthly or quarterly. By doing so, you buy more shares when prices are low and fewer shares when prices are high. This approach helps reduce the impact of market volatility on your overall investment and can lead to a lower average cost per share over the long term. It's a disciplined way to invest without trying to time the market.
Example
Instead of investing $12,000 all at once, someone might dollar-cost average by investing $1,000 into a stock index fund every month for a year.