Dollar cost averaging is a fancy way to explain one of the easiest investing principles you can follow. When you dollar cost average you are investing a set amount of money every month regardless of what is going on in the stock market. For those of you investing in a 401k every pay period, you are already practicing dollar cost averaging. By doing this, you can buy more shares when the prices are low and less shares when the prices are high. Overtime, this should result in a lower cost per share. So, for those shoppers out there, it is like buying more when things are on sale and less when things are full price, which should also be your goal with investing.
Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This post was contributed by Brittney Castro, CFP® professional and creator of www.FinanciallyWiseWomen.com. Brittney Castro is not affiliated with Theeverygirl.com. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895