Smarter and Harder

A Simple Guide to Dollar cost Averaging

One of the biggest mistakes any ordinary investor can make is trying to time the market.

A practically endless body of research has shown that when regular investors try to beat the market on timing, they tend to lose money over time.

A far more effective strategy in most cases is to simply buy and hold investments with a strategy called dollar cost averaging.

The idea behind the strategy is rather simple: buy into an investment in smaller amounts at regular intervals.

This way, you buy when the stock price is high, low, and everything in between, averaging your cost over time.

This avoids the pitfalls of trying to time the market and getting it wrong, which is much more common than getting it right.

Since a well-diversified will almost always show strong growth over a long enough term, dollar cost averaging makes for a safer way to take the bumpy ride up.

Since a well-diversified will almost always show strong growth over a long enough term, dollar cost averaging makes for a safer way to take the bumpy ride up.

Dollar cost averaging works when selling too - average your way out of an investment to reduce the risk of selling it all too low.

As with all things investing, the average person will have much better results over time with simple, reliable strategies than by trying to be flashy and win it all.

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