Dollar-Cost Averaging

Dollar-cost averaging is one of the most important How Money Works™ principles.

Dollar-cost averaging means investing a certain fixed amount each month, regardless of what's happening in the stock market. This eliminates having to predict when to invest as you will be able to take advantage of the market highs and lows – by purchasing fewer units when the prices are high and more units when the prices are low.

While dollar-cost averaging can't assure a profit or protect against loss, it does show how a systematic investing plan, sustained over a period of time has the potential to pay off, relieving your worries about whether the market is up or down.