Dollar Cost Averaging investment strategy explained

Dollar Cost Averaging (DCA) is an investment strategy where a fixed amount of money is invested at regular intervals, regardless of whether asset prices are rising or falling. This approach aims to reduce the pressure of timing the market and helps investors avoid impulsive decisions during periods of volatility.

By investing a consistent sum, investors naturally purchase more units of an asset when prices are low and fewer units when prices are high. This mechanism averages the purchase cost over the long term. While the strategy promotes discipline and consistency, experts note that it does not eliminate risk; investors must still carefully select the underlying assets they choose to fund.