Dollar-cost averaging

Common card · No. 302391

Dollar-cost averaging (DCA) is an investment strategy which aims to apply value investing principles to regular investment. The term was coined by Benjamin Graham in his 1949 book The Intelligent Investor. Graham writes that dollar-cost averaging "means simply that the practitioner invests in common stocks the same number of dollars each month or each quarter. (The same nomenclature applies to commodity markets, even gold). In this way one buys more shares when the market is low than when it is high, and he is likely to end up with a satisfactory overall price for all their holdings." Dollar-cost averaging is also called pound-cost averaging (in the UK), and, irrespective of currency, unit cost averaging, incremental trading, or the cost average effect. It should not be confused with the constant dollar plan, which is a form of rebalancing investments. The technique is called such because of its potential for reducing the average cost of shares bought. As the number of shares that can...

Read on Wikipedia · Image CC BY-SA 4.0