What Is Dollar Cost Averaging?

Dollar cost averaging is a way to invest money gradually over time instead of all at once.

Rather than investing a large amount on a single day, you invest smaller amounts on a regular schedule. This could be weekly, every other week, or monthly—whatever fits your situation.

The price of an investment moves up and down constantly. When you invest at regular intervals, each purchase happens at a different price. Some purchases will be at higher prices, and others will be at lower prices. Over time, this spreads out your entry point.

Many people use this approach without even realizing it. If you’re investing from each paycheck into a retirement account, you’re already dollar cost averaging.

There isn’t one “right” way to invest a lump sum. Some people choose to invest it all at once. Others prefer to spread it out over time.

Dollar cost averaging can feel more comfortable, especially when markets are uncertain. It removes the pressure of trying to pick the perfect time to invest.

At the same time, it’s not about finding a perfect strategy. It’s about finding an approach you can stick with.

Consistency matters more than timing.

Getting money invested and staying invested over time is what tends to make the biggest difference.

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