What is Dollar Cost Averaging
5paisa Research Team
Last Updated: 01 Jan, 2025 01:05 PM IST

Content
- What Exactly is Dollar Cost Averaging?
- Market Timing vs. Dollar Cost Averaging
- Who Can Benefit from Dollar-Cost Averaging?
- The Downsides of Dollar-Cost Averaging
- Final Thoughts
Dollar cost averaging is a tactic that can lower your investing costs and reduce risk at the same time. Dollar cost averaging can help you cut your investing costs and increase profits over the long term.
To dollar-cost-average, you invest the same amount of money at regular periods in a certain asset. Instead of trying to time the market, you purchase at a variety of prices. Dollar-cost averaging isn't for everyone, and there are situations when it works better than alternative investing techniques.
In removing some of the emotional barriers to investing, however, it can be an effective tool. In this post, you’ll learn how dollar-cost averaging works and when it's the most effective for saving money along with its potential downsides.

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