Editing Investment (section)

=== Dollar cost averaging ===
[[File:WikiGraphic.PNG|thumb|Dollar cost averaging: If an individual invested $500 per month into the stock market for 40 years at a 10% annual return rate, they would have an ending balance of over $2.5 million.]]

[[Dollar cost averaging]] (DCA), also known in the UK as pound-cost averaging, is the process of consistently investing a certain amount of money across regular increments of time, and the method can be used in conjunction with value investing, growth investing, momentum investing, or other strategies. For example, an investor who practices dollar-cost averaging could choose to invest $200 a month for the next 3 years, regardless of the share price of their preferred stock(s), [[mutual fund]]s, or [[exchange-traded fund]]s.

Many investors believe that dollar-cost averaging helps minimize short-term volatility by spreading risk out across time intervals and avoiding market timing.<ref name=":02"/> Research also shows that DCA can help reduce the total average cost per share in an investment because the method enables the purchase of more shares when their price is lower, and less shares when the price is higher.<ref name=":02" /> However, dollar-cost averaging is also generally characterized by more brokerage fees, which could decrease an investor's overall returns.

The term "dollar-cost averaging" is believed to have first been coined in 1949 by economist and author Benjamin Graham in his book, ''[[The Intelligent Investor]].'' Graham asserted that investors that use DCA are "likely to end up with a satisfactory overall price for all [their] holdings."<ref>{{Cite book |author=Graham, Benjamin |title=The intelligent investor: a book of practical counsel |date=2003 |publisher=HarperBusiness Essentials |oclc=1035152456}}</ref>