Dollar Cost Averaging

Dollar cost averaging, the practice of committing a fixed amount of money to an investment program on a regular basis, is a popular practice with many long-term investors. By investing a set amount regularly (usually monthly or quarterly), investors are able to avoid the pitfalls of trying to time market peaks and valleys. Also, because the dollar amount of the investments is set, investors who practice dollar cost averaging buy more shares of a stock or mutual fund when they are less costly and fewer shares when they are more expensive.