Dollar-Cost Averaging (DCA)
InvestingGlossary term
Definition
A strategy of investing a fixed dollar amount at regular intervals regardless of market conditions. By buying more shares when prices are low and fewer when prices are high, DCA reduces the impact of volatility and removes emotional decision-making from investing.
Related terms
- Passive InvestingAn investment strategy that aims to match market returns rather than beat them, typically through index funds and ETFs. Passive investing relies on broad diversification and low costs, and research shows it outperforms most active managers over long periods.
- PortfolioA collection of financial investments like stocks, bonds, mutual funds, ETFs, and other assets. Diversifying your portfolio helps manage risk.
- Market VolatilityThe degree of price fluctuation in financial markets. High volatility means large price swings, indicating uncertainty or risk. Measured by the VIX (Volatility Index).
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