What is Dollar-Cost Averaging?

Dollar-Cost Averaging is an investment method that is meant to eliminate the risk of investing at the wrong time.  The idea is that you buy shares of stock on a regular schedule, regardless of what the price is.  You buy more shares when the price is low and fewer shares when the price is higher.  You might have bought some shares at $10 per share and $20 per share but the fact that most of the purchases were below $10 per share would push down the average cost per share.  This strategy means that you don’t need to worry about trying to time the market.

Would I recommend it?  Sure.  I would just be shy about how much I buy at the top of the graph.  While it is nearly impossible to figure out where the floor is, it is much easier to find the ceiling.

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