Dollar-Cost Averaging

How investing a fixed amount on a schedule works, a real test through the 2008 crash, how it compares with investing a lump sum, and how to automate it.

The same amount, on a schedule

Dollar-cost averaging means investing a fixed dollar amount at regular intervals, such as $500 on the first of every month, no matter what the market is doing. When prices are high, your $500 buys fewer shares. When prices are low, it buys more. Over time, your average cost per share tends to be lower than the average price over the same period.

If you invest part of every paycheck into a retirement plan, you are already doing it.

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