Dollar-Cost Averaging

Dollar-cost averaging means investing the same amount at regular intervals rather than trying to pick a moment. The discipline is spacing purchases evenly.

It buys more when prices are low and less when they are high. The same 100 buys ten units at 10 and five at 20, so the average purchase price falls naturally.

Its greatest value is psychological. With no decision about timing to make, you keep investing through a crash and avoid overcommitting in a surge. Judgement is replaced by rule.

It does not always produce the higher return. In steadily rising markets, investing everything at the start does better. Its strength is sustainability, not maximum performance.

Automating the transfer amplifies the effect. Removing the monthly decision means never forgetting or postponing, and leaves less room to be swayed by the news. A broadly diversified index product suits this approach better than an individual stock.