August 30th, 2021 | Updated on June 30th, 2022
Dollar-cost averaging is the strategy of spreading out your stock or fund purchases, buying at regular intervals and in roughly equal amounts. When done properly, it can have significant benefits for your portfolio.
This is because dollar-cost averaging “smooths” your purchase price over time and helps ensure that you’re not dumping all your money in at a high point for prices.
Dollar-cost averaging can be especially powerful in a bear market, allowing you to “buy the dips,” or purchase stock at low points when most investors are too afraid to buy.
Committing to this strategy means that you will be investing when the market or a stock is down, and that’s when investors score the best deals.