Remember the days of pocket money? Every month you put the same amount into the bank. Then at the end of the year, you look back on your savings with a smile.
Dollar Cost Averaging (DCA) is just like that. DCA is when investors deposit the same amount of money into the stock market every fortnight (or month or year) regardless of how the stock market is behaving. As a result, the investor will sometimes purchase more stocks (when the price is down) and sometimes they’ll purchase less (when the price is up). DCA is a great option for nervous investors because it puts the mind at ease while stocks are on the move.
Tips and tricks
With DCA you can start buying shares any day of the year! You won’t have the same problem as other investors pondering the question: when is the perfect time to get into the market?