How it works. Specifically, dollar cost averaging requires investing the same dollar amount at regular intervals over an extended period of time resulting in more shares purchased when the price per share is low and fewer shares purchased when the price per share is high. This hypothetical worksheet demonstrates how dollar cost averaging works. Total Number of Months Investor's Avg. Total Shares Purchased This chart is not intended to represent past or future performance of the Harris Insight Funds.
Prices fluctuate with market conditions and there is no guaranteed rate of return.
As you can see, in the end the average cost per share in this example was lower than the average share price over the time period covered. The investor was able to purchase more shares when the share price dropped and fewer as it rose. While no investment technique can promise a profit or protect against a loss, dollar cost averaging helps long-term investors improve their chances for success. It minimizes concerns about market-timing through a discipline that relieves the investor of grappling with uncertainty about the right time to invest. By investing regularly, investors also avoid yielding to the temptation to sell when the market drops, possibly resulting in a loss.