What is Dollar Cost Averaging and Why It Works

Dollar cost averaging (DCA) means investing a fixed amount regularly, regardless of market conditions. Instead of trying to time the market, you invest $500 monthly in an index fund. This strategy reduces timing risk, builds discipline, averages out price fluctuations, and removes emotional decision-making. It’s perfect for busy parents who want to invest consistently without constantly monitoring markets. Set it and forget it through automatic contributions to your 401(k), IRA, or brokerage account.