Dollar Cost Averaging

• Logic behind dollar cost Averaging:
• You can expect a stocks price to vary over a period of time (sometimes lower, sometimes higher)
• helps you reduce risk of short-term stock price movements
• automatically encourages you to buy more share when prices are lower and less share when prices are higher
• takes the emotion out of when to enter a trade
• can help you outperform during bear markets and
• Compared it to buying the entire amount of an investment at one time
• It it NOT buying  a fixed number of shares on a regular basis

Dollar Cost Averaging Cautions

• You may end up worse off if a stock is in a long-term bull market and keeps going up
• You may have to pay more in trading costs (more transactions)
• You may miss out on collecting dividend payments by waiting to purchase

Dollar Cost Averaging Example

Instead of buying $10,000 worth of a stock in one order, purchase $1,000 of the same stock every month for 10 months