What is dollar-cost averaging?
Dollar-cost averaging (DCA) means investing the same amount of money on a fixed schedule — say $200 every month — no matter what the price is doing.
Why people do it
Nobody can reliably pick the perfect moment to buy. DCA sidesteps the guessing: when the price is high, your fixed amount buys fewer shares; when it's low, it buys more. Over time your average cost lands somewhere in the middle — and you never had to time anything.
A quick example
You invest $100 a month into one stock. Month one it costs $50 — you get 2 shares. Month two it drops to $25 — you get 4 shares. Month three it's back to $50 — 2 shares. You've spent $300 and own 8 shares, an average cost of $37.50 per share, even though the price ended exactly where it started.
What it can't do
DCA doesn't protect you from a bad investment — buying a falling stock on a schedule just means you own more of something falling. It works best on broad, durable things you want to hold for years, and it rewards consistency over cleverness.
Want the in-depth walkthrough and calculator?
Subscribers get the full six-step DCA setup guide, a projector that shows what a monthly plan could grow into, plus buy/hold/sell signals and AI analysis.
This guide is educational, not financial advice.