What is Dollar Cost Averaging?
As a saver (not a spender) you have access to one of the most powerful savings tools ever – dollar cost averaging! Even better is most people don’t really understand how it works but when you do you’ll be in love with the math behind dollar cost averaging.
What is DCA exactly?
Dollar cost averaging is the systematic process of investing the same amount of money at regularly scheduled intervals (whether you like it or not). It takes the guesswork out investing by adding a level of repetitiveness or rigidity to the program. Take a peak at dollar cost averaging math here:
When is Dollar Cost Averaging Best?
DCA is best when the markets are flat to down. When the stock market is up DCA performs the worst. Basically if you had all of your money investing from the get-go you’d fare better if the market is rising, but if the market is dropping the slow trickle in effect DCA has is much preferable.
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