Dollar Cost Averaging

Dollar Cost Averaging is a method of investing which the investor invests in a mutual fund (or other investment vehicles) periodically in order to gain a better “average” price. It ignores short term fluctuations in the stock market, adding to one’s portfolio through thick and thin, and attempts to take advantage of the long term upward drift in equities as a whole, with no regard for market timing.

Example: If you purchased 100 shares of XYZ at $100, then added 100 shares at $96, your dollar cost average would then be $98.

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