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dollar cost averaging
Definition
An investment strategy designed to reduce volatility in which securities, typically mutual funds, are purchased in fixed dollar amounts at regular intervals, regardless of what direction the market is moving. Thus, as prices of securities rise, fewer units are bought, and as prices fall, more units are bought. also called constant dollar plan.
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An Explanation of Dollar Price Averaging Versus Simple AveragingNever confuse dollar price averaging with simple averaging. For instance, let's say an investor purchased 1,000 shares of Microsoft stock at $40 per share at the first interval and another 1,000 share ... Read more
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