Definition
Dollar-cost averaging (DCA) involves investing a fixed dollar amount at regular intervals (e.g., monthly), regardless of the asset's price. When prices are low, you buy more shares; when high, fewer shares. This reduces the risk of investing a lump sum at an inopportune time and removes emotion from investment decisions. While lump-sum investing historically outperforms DCA on average, DCA provides psychological comfort and fits naturally with regular income. It's the basis for 401(k) contributions.
Formula
Example
Investing $500 monthly in an ETF: Month 1 at $50/share = 10 shares; Month 2 at $40/share = 12.5 shares; Month 3 at $55/share = 9.09 shares. Total: $1,500 invested, 31.59 shares, average cost $47.49/share.
FAQ
What is Dollar-Cost Averaging?
Investing fixed amounts at regular intervals regardless of market conditions.
How do you calculate Dollar-Cost Averaging?
A common formula for Dollar-Cost Averaging is: 每股平均成本 = 总投资金额 / 总购买股数
Why is Dollar-Cost Averaging important?
Dollar-Cost Averaging helps investors evaluate investment strategies and make more informed decisions.