2 ms·

New to this whole investing thing... what's dollar-cost-average in layman's terms?

• gobengo 12y ago
  In short: Investing into the same asset in fixed amounts over time. It doesn't inherently improve your returns, but is a good idea to save consistently over time (not in lumps that you can procrastinate on). There are also benefits to your psyche. If you invest all at once, the asset value could drop by 50% the next day, and you feel horrible. If you had invested that money over time, your asset would not be 50% of your total investment. Again, this doesn't actually mean you get more returns. It just reduces the volatility of your returns at any one point in time. If you would like to get a good overview of strategies like this, read this wiki. http://www.bogleheads.org/wiki/Dollar_cost_averaging http://www.bogleheads.org/wiki/Dollar_cost_averaging