What is dollar-cost averaging?

Dollar-cost averaging is an investment strategy where an investor consistently allocates a fixed amount of money to purchase a particular investment, such as stocks or mutual funds, at regular intervals regardless of the asset's price. This method allows investors to buy more shares when prices are low and fewer shares when prices are high, leading to an overall lower average cost per share over time.

The strategy is particularly beneficial in mitigating the impact of volatility in the market. Investors do not need to worry about the fluctuations in price at the time of investment, which can lead to a more disciplined and less emotion-driven approach to investing. This approach can be especially advantageous for long-term investors who want to build wealth steadily over time without the stress of market timing.