When prices soared, however, he still came across looking good, having paid a significantly lower average price per share than the stock's most recent price would indicate. Young people, especially, would benefit from the strategy. That really builds wealth. While there are fees associated with setting up dollar cost averaging plans, many investment firms will waive minimum account balances in exchange for handling the long-term arrangement. Again, that allows someone with minimal funds to get started.
Many companies also allow investors to set up dividend reinvestment plans, or DRPs.
As the name suggests, this technique allows people to buy stock directly from the company using dollar cost averaging. Despite the numerous advantages of systematic investing, investors should remain wary of at least one major pitfall, experts agree. Say you started a college savings plan relying on a growth fund. There can be too much of a good thing if you don't watch out. All Rights Reserved.