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


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