SmartRateToolsDefinition
Dollar-cost averaging (DCA) is investing the same dollar amount at regular intervals, such as weekly or monthly, no matter what the market is doing.
How it works
With a fixed contribution, you buy fewer shares when prices are high and more shares when prices are low. Over time, this can smooth your average purchase price.
Why people use DCA
- Builds consistency and removes guesswork
- Reduces the pressure to time market entry perfectly
- Fits naturally with paycheck-based saving and retirement plans
Important note
DCA helps with behavior and discipline, but it does not guarantee profits or protect against losses in falling markets.