What is dollar-cost averaging?

Dollar-cost averaging means investing a fixed amount regularly. It reduces timing pressure and smooths entry cost across market swings.

Quick Definition

Dollar-cost averaging (DCA) means investing a fixed sum at regular intervals regardless of price. You buy more shares when prices are low and fewer when high, naturally lowering your average cost.

Use this concept with tools

DCA

Periodic investing with expected annual return.

Fee Drag

Impact of ongoing fees on final value.

ROI + Annualized

Calculate total ROI and annualized return.

NPV

Discounted cashflow valuation.

Related concepts

What does diversification mean?

Diversification means spreading investments across different assets, sectors, or regions to reduce risk. When one holding falls, others may offset the loss — don't put all eggs in one basket.

What is the relationship between risk and return?

Higher potential returns come with higher risk — this is the fundamental risk-return tradeoff. Smart investing isn't about avoiding risk; it's about taking only the risk you understand and can afford.

What is the difference between nominal and real returns?

Nominal return is your raw percentage gain. Real return ≈ Nominal return − Inflation rate. If a fund returns 8% but inflation is 3%, your real gain is only ~5% in purchasing power.