Monday, November 16, 2009

Today's Fly Or Die Commerce Report: Dollar Cost Averaging Definition

According to Wikipedia: "Dollar cost averaging is a timing strategy of investing equal dollar amounts regularly and periodically over specific time periods (such as $100 monthly) in a particular investment or portfolio. By doing so, more shares are purchased when prices are low and fewer shares are purchased when prices are high. The point of this is to lower the total average cost per share of the investment, giving the investor a lower overall cost for the shares purchased over time.

Dollar cost averaging is also called DCA and constant dollar plan in the US, pound-cost averaging in the UK, and by the currency-neutral terms unit cost averaging and cost average effect."

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