Dollar-Cost Averaging

By Entrepreneur Staff

Dollar-Cost Averaging Definition:

To invest, as in shares of stock, fixed amounts of money at regular intervals so as to buy more at lower prices ad less at higher prices

Dollar-cost averaging means that if you put the same amount in each year, you'll buy more investments, such as shares of a mutual fund, when prices are down and fewer when prices are up. The end result will be that you'll pay a lower average price than the actual average price of the investment during that period.

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Individual Retirement Account (IRA)

An interest-earning retirement savings account in which the allowable contributions and earnings aren't taxed until the funds are withdrawn, after age 59 1/2.

Dollar-Cost Averaging

To invest, as in shares of stock, fixed amounts of money at regular intervals so as to buy more at lower prices ad less at higher prices

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A reasonable investigation of a proposed investment deal and of the principals offering it before the transaction is finalized to check out an investment's worthiness; generally performed by the investor's attorney and accountant.

Roth IRA

A personal retirement savings vehicle created by the Tax Payer Relief Act of 1997. A Roth IRA allows certain investors to make non-deductible contributions of up to $4,000 annually and, provided certain requirements are met, offers tax-free and penalty-free withdrawals for important financial needs in addition to retirement.