Monday, September 8, 2008

En Passant: Dollar Cost Averaging

While in the course of studying for the Series 6 Licensing Exam, I've come across a term that I was not sure if I have covered in in any of my previous posts. I thought it should be something that I should touch on. The markets can be a rough and tumble place for your money; sometimes the volatility can be quite high. With "Dollar Cost Averaging" an investor can invest a set dollar amount at a set interval, usually monthly. This method of investing slowly and systematically eliminates much of the timing risk an investors faces. Without needing to worry as much about getting into the market at the top or the bottom, an investor can focus more on where an investment will go in the longer term and less about where it will be tomorrow.

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