Dollar-Cost Averaging

Dollar-cost averaging, also known as a constant dollar plan, is an investing technique that can help reduce market risk. A type of formula investing, dollar cost averaging entails adding a fixed amount of money on a regular schedule to an investment account. Because the share price fluctuates, you buy more or fewer shares depending on its price at any given time. If you invest regularly over time, even when the stock's value falls, the average price you pay per share will be lower than the actual average price per share.

The investment strategy described in this article is for information purposes only and use does not guarantee a profit. Investors should fully research any strategy before making an investment decision.