Question 1

What is dollar cost averaging?

Accepted Answer

Dollar cost averaging means investing the same fixed amount at regular intervals (e.g. $500/month) regardless of whether the market is up or down. Over time, you buy more units when prices are low and fewer when high, averaging out your entry price.

Question 2

Is DCA better than lump sum?

Accepted Answer

Mathematically, lump sum investing outperforms DCA about two-thirds of the time because money invested earlier has more time to grow. But DCA is psychologically easier and works well for people investing from their salary each month.

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