General Investing
  -General information about
  getting started.
Stocks
  -How investing in the stock
  market works
Bonds
  -How bond investing works
Mutual Funds
  -How mutual funds work
Economics
  -A basic intro to the economy
Advanced Investing Topics
  -This section covers topics
   like futures and options

Dollar Cost Averaging
Term category: Stocks, Strategies
In 10 words or less:  A strategy of buying stocks at multiple prices  to remove timing risk.

Definition: Dollar cost averaging occurs when you buy shares of stock at multiple prices over time.  This is what happens when you decide to invest periodically.

Advice: Dollar cost averaging is great because it removes timing risk.  You don't have to worry about getting in a stock at "the right time."  Consider this example:

Option A: Invest $1,000 at $50 per share.
Option B: Invest $250 per month for four months

Option B:
Month 1: $50 per share (5 shares)
Month 2: $45 per share (5.56 shares)
Month 3: $40 per share (6.25 shares)
Month 4: $55 per share (4.55 shares).

 

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