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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use