Dollar Cost Averaging May Be Dull, But It Really Pays Off

Dollar cost averaging is an investment technique that has been used for many years. Although it has been around for many years, it is still one of the most successful methods of investment that is available. Here are the basics of dollar cost averaging and what some of its advantages are.

Dollar Cost Averaging

With dollar cost averaging, you are going to decide to invest a fixed amount of money on a regular interval schedule. For example, you might decide to invest $100 every month into a particular security. When you do this, you are going to purchase more shares whenever the price of the security is low. Whenever the price is high, you are going to be purchasing fewer shares.

Advantages

By utilizing this method, you are going to be able to spread out the costs of the investment. Instead of investing in large amount of money with large transaction costs, you can minimize this impact by spreading out the investment. This strategy will also ensure that you invest regularly. This will help you create a good habit when it comes to saving for the future. Another advantage of the strategy is that you can start out small and work your way up.

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