One way to ensure that you will stick with the discipline is to participate in an investment program that automatically makes periodic transfers of money from your bank or central asset account into your investment. Many brokerage firms and financial institutions offer automatic electronic transfers at little or no cost. When it comes time to sell shares of an investment that has been accumulated through dollar cost averaging, make sure you talk with your tax adviser. Reinvesting Dividends Counts Reinvesting dividends from your investments is another way of dollar cost averaging. Again, you are buying more shares when prices are low and fewer shares when prices are high.
Most financial institutions offer low or no-cost automatic dividend reinvestment programs.
Investing regularly lessens the chance that you'll make investment decisions at just the wrong time. Dollar cost averaging can enable you to stick with an investment program over the long term that will help you achieve your financial goals. Rosemary Berkery is Senior Vice President and Director of the Merrill Lynch Private Client Marketing Group. The information in this Internet site is directed at, and is intended for distribution to, and use by, persons in the U.S. only. It is not intended for distribution to, or use by, any person in any other jurisdiction.