By investing a fixed amount on a set schedule, you are able to even out market ups and downs. Although dollar cost averaging cannot guarantee a profit or prevent a loss, it does allow investors to buy more shares of a mutual fund when the price is low and fewer shares when the price is high. This typically results in a lower average cost per share than if a constant number of shares of a mutual fund are purchased at set intervals. Dollar cost averaging is suitable for investors who wish to invest in mutual funds gradually, over time, in order to average out the price. Because of its low minimum investment, dollar cost averaging is suitable for those just beginning to invest and those who might otherwise not invest at all.
All investments appear on one consolidated statement.
Fractional, as well as full, shares are purchased, so your shares accumulate faster. Dividend and Capital Gain reinvestment is available. In many cases, you can set up an electronic transfer from your savings, checking, or money market account directly into a mutual fund. Systematic investing lowers overall cost in a declining market. Dollar cost averaging is a long-term strategy.