Summary of Dollar Cost Averaging

Dollar cost averaging is a simple and straightforward method of investing. It is often an option for the investor who wants to systematically contribute to his or her investment portfolio over time. By electing to dollar cost average, you may reduce some of the risk that poor timing and potentially adverse price fluctuations will have on your investment decisions.

Dollar cost averaging works because you invest the same amount of money each period so you buy more shares when the price is low and fewer of the more expensive shares. In this way, you average the price you pay for shares of your investment.