Dollar-cost averaging explained in plain English — learn how steady investing can lower risk and smooth out stock market ups ...

Dollar cost averaging is an investment strategy whereby the investor spends the same sum of money at regular intervals to purchase one specific investment instrument. For example, an investor ...

For example, a study done by Northwestern Mutual found that lump-sum investing generated better cumulative returns at the end of 10 years than dollar-cost averaging almost 75% of the time ...

Dollar-cost averaging involves investing a fixed amount at regular intervals—say, $1,000 per month over 12 months. This approach reduces the risk of investing everything at a market peak.

As an example, a 40-year-old woman making $300,000 a year aims to save 20% of her gross income, or $60,000. She already puts $23,000 into her 401k account. For the additional $37,000, she dollar ...

In this example, dollar-cost averaging would beat a one-time lump sum investment. On top of that, your average cost per share is a few dollars lower as well ($17.6 vs. $20).

For example, once you are familiar with investing and have some confidence in doing your own research, you might consider maintaining your dollar-cost averaging strategy into an S&P 500 fund or ...

Dollar cost averaging can ensure that you invest your money in equal monthly amounts. You can buy whatever amount of shares you can for $2,000 every month and you can do this for six months.

For example, let’s say that you inherit $120,000. Your plan is to put it all into a balanced portfolio consisting of 40% equities, 40% fixed income, 10% real estate and 10% commodities.

It's easier, and cheaper, to change course, if necessary. Third, it makes diversification easier. In our example, you could, for example, buy twelve different $500 investments across the year.

Here’s how dollar-cost averaging performs in a market that’s going mostly sideways, with a few ups and downs. Let’s assume that $10,000 is split equally among four purchases at prices of $50 ...