What is the concept of dollar-cost averaging?

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of market conditions. This approach allows investors to purchase more shares when prices are low and fewer shares when prices are high, leading to a potentially lower average cost per share over time. It simplifies the investing process by reducing the emotional reactions that can come with market volatility and eliminates the need to time the market, which can be incredibly challenging even for experienced investors.

By consistently investing the same dollar amount, investors can benefit from the ups and downs of the market, which ultimately can lead to more disciplined saving and investing habits. This method is particularly beneficial for those investing for the long term, as it encourages steady investment without the anxiety that often accompanies trying to guess the best times to buy.