Dollarcost averaging reduces risk from "summary" of All About Index Funds by Richard A. Ferri
When you invest a fixed amount of money at regular intervals, you buy more shares when prices are low and fewer shares when prices are high. This strategy, known as dollar-cost averaging, can reduce risk by smoothing out the effects of market volatility on your investment. By purchasing more shares when prices are low, you lower your average cost per share over time. This means that you don't have to worry about trying to time the market to get the best price. Instead, you simply invest a fixed amount of money at regular intervals and let the market do its thing. Dollar-cost averaging is a passive investment strategy that is particularly well-suited to index funds. With index funds, you are investing in a broad portfolio...Similar Posts
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