Investor Glossary-dollar cost averagingInvestor Glossary-dollar cost averagingInvestor Glossary-dollar cost averagingInvestor Glossary-dollar cost averagingInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Dollar Cost Averaging

The HTML to link to this page
 

Dollar cost averaging is long-term investment strategy in which a fixed dollar amount is added to an investment on a regular schedule, regardless of the market price of the security. Dollar cost averaging is also called a constant dollar plan. Since an investment's share price fluctuates, by following a dollar cost averaging strategy, more shares are bought when the share price is low, and fewer shares when the share price rises. Over time, dollar cost averaging results in a lower average cost per share than a plan that involves purchasing a equal number of shares at each interval. Dollar cost averaging is a popular way to invest in mutual funds, and investing regularly through dividend reinvestment plans is a form of dollar cost averaging. While dollar cost averaging reduces the risk of investing a lump sum in a single investment at the wrong time, dollar cost averaging does not guarantee the investor a profit.



Rate this dollar cost averaging definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: stock market close, quality assurance, reverse mortgage, Key Rate Duration, annual return, option premium, in escrow, VIX, Zero Cost Collar, ex-dividend date, deferred tax, limit order, cancelled check, open position, current ratio, labor relations, margin rate, wholly-owned subsidiary, retained earnings, implied volatility, diluted share, LIBOR, debt service coverage, APR, dividends payable, class C shares, liquidity ratio, 144a, minority interest, 1031 exchange, deferred revenue, inflation, covered put, balance sheet, phantom income, per diem, 401a, average price per share, risk management, required rate of return, FTSE, irrevocable trust, FICO score, stock split, EBITDA, ex-dividend, real GDP, 1035 exchange, command economy


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use