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


Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # 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 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
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use