Dollar-cost averaging (DCA) is an investment approach where an individual divides a predetermined total investment amount into periodic purchases of a specific asset, such as stocks or mutual funds. These purchases are made at regular intervals, regardless of the asset’s current price. The essence of DCA is to mitigate the impact of market volatility by acquiring more shares when prices are lower and fewer shares when prices are higher. This strategy aims to attain a favorable average purchase price over time and is often favored by long-term investors seeking a disciplined and less speculative investment approach.
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