Question 1

What is dollar-cost averaging?

Accepted Answer

Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount at regular intervals, regardless of market conditions. This approach buys more shares when prices are low and fewer when prices are high.

Question 2

Is DCA better than lump sum investing?

Accepted Answer

Studies show lump sum investing outperforms DCA about 66% of the time because markets tend to go up. However, DCA reduces risk and emotional stress, making it practical for most people investing from regular income.

Question 3

How often should I invest with DCA?

Accepted Answer

Most commonly, investors DCA weekly, bi-weekly (with paychecks), or monthly. The frequency matters less than consistency. Automating your contributions removes emotion from the equation.

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