Consistent and Regular Investing (Dollar Cost Averaging in Action)
Starting your investment plan early is important, but so too is following a strategy of consistent and regular investing. Even small additions to your investment can add up over time. And by investing regularly over months and years, you can actually benefit from a volatile market.
Dollar Cost Averaging is a time-proven investment technique where you invest a fixed amount at regular intervals, regardless of what the market is doing. Over time, your money buys more shares when prices are low and fewer shares when prices are high. As a result, the average price per share may be lower than if you invested all your money at once (for example, you can avoid the risk of investing a lump sum amount when prices are at their peak).
Dollar- Cost Averaging at Work
Dollar cost averaging does not ensure a profit or guarantee against loss in declining markets. For the strategy to be effective, you must continue to purchase shares in both market ups and market downs.