Dollar-cost averaging works Because the stock market goes through many ups and downs over time, the odds of you being able to predict or pinpoint the lows with any consistency are extremely slim.

By dollar-cost averaging, or making a consistent investment of $50 each month, you would have ended up with 64.61 shares. That’s near the middle point between buying low and buying high.

Dollar-cost averaging is a popular strategy for building investment positions over time. When you dollar-cost average, you invest equal dollar amounts in the market at regular intervals of time.

Dollar cost averaging can be a smart way to invest because it mitigates certain risks inherent in investing. For the most part, you can't predict when the market will go up or down.

Dollar-cost averaging could also look like if you decide to invest $5,000 of your savings by splitting that cash into five parts, where $1,000 is invested each month for five months.

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Dollar cost averaging can ensure that you invest your money in equal monthly amounts. You can buy whatever amount of shares you can for $2,000 every month and you can do this for six months.

Another risk of dollar-cost averaging is that you may be diminishing your long-term returns. If you only buy when the market goes down, for example, you’re more likely to generate profits when ...

"Historically, dollar-cost averaging produces lower long-term returns than does lump-sum investing," wrote Morningstar researchers Maciej Kowara and Paul Kaplan. That makes sense.

Dollar-cost averaging can be a great way to invest during volatile or uncertain markets. For example, there was a stretch in December 2018 when the Dow Jones Industrial Average fluctuated by 500 ...