Investing Basics

What Is Dollar-Cost Averaging?

Dollar-cost averaging is the practice of investing a fixed amount at regular intervals, regardless of the price. Because the amount is fixed, more shares are bought when prices are low and fewer when prices are high. It is how many workplace retirement contributions operate automatically with each paycheck.

Example

Investing 300 a month buys 10 shares at 30, then 12 shares at 25, then 7.5 shares at 40.

Compared With Lump-Sum Investing

Research on whether it produces better or worse results than investing all at once shows outcomes vary with market conditions; neither approach guarantees a particular result.

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🔗 Related Terms

Savings Rate Volatility 401(k) Plan Compound Interest

More Investing Basics Terms

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.