Dollar-cost averaging (DCA) is a simple investment strategy that involves investing the same amount of money at regular intervals, regardless of the market price. This means that you're not trying to time the market, but it’s about investing consistently and spending more time in the market.
For example, let's say you decide to invest P100 or $2 every month. If the market is up when you invest, you'll buy fewer shares. But if the market is down, you'll buy more shares. Over time this will help you to average out your cost per share, which has the potential to lead to better returns.
The benefit of dollar-cost averaging is that it takes emotion out of investing. When you're not trying to time the market, you're less likely to make rash decisions that could hurt your investment.
You might be wondering if this strategy is for you. Well, DCA is not a get-rich-quick scheme. It's a long-term strategy that can help you build wealth over time.
Start small. Be consistent and don’t panic.
The market will go up and down, but remember, if you stay consistent with your investments, there’s a higher chance that you’ll be in good shape over the long term.
