Dollar Cost Averaging

[This post is written and copyrighted by FIRE Finance (http://firefinance.blogspot.com).]

Art Dinkin of Moment on Money has written a nice article on Dollar Cost Averaging (DCA). So what is DCA? To quote Art:

"Dollar Cost Averaging is a method of systematically moving money in (or out) of an investment over a period of time. While the technique would work just as well for taking money out of an investment, let us focus on getting money in. The key is to use equal dollar amounts with every transaction. This means you buy more shares per transaction when the price per share is low and fewer shares when the price per share is high. Dollar cost averaging helps with the buy low aspect of "Buy low and sell high"."

Art explains it further with a simple example which has data to prove the concept of DCA. Please check it out to take advantage of DCA.

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