Sunday, December 26, 2010

Dollar-cost Averaging

Dollar cost averaging involves investing a fixed (or possibly increasing) amount of money on a systematic basis, at regular intervals. The benefit of dollar cost averaging is that in a bear market when security prices drop the fixed regular investment amount will result in more units or shares being purchased. This strategy removed the hassle of market timing and can be a useful idea for most investors who are looking to build long term wealth and savings e.g. for retirement or other goals.

Synonyms: Automatic investing, Systematic investment purchases
 
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