What does dollar-cost averaging involve?

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of the asset's price. The core concept behind this approach is to reduce the impact of volatility on the overall purchase. By consistently investing the same amount, an investor buys more shares when prices are low and fewer shares when prices are high. This practice can lower the average cost per share over time and helps to eliminate the emotional decision-making that can lead to poor investment choices.

Using dollar-cost averaging can be particularly beneficial in volatile markets, as it encourages a disciplined investment approach and can lead to better long-term returns. It allows investors to accumulate more shares over time without the stress of trying to time the market perfectly.