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What is dollar-cost averaging?

Markets are volatile. What’s an investor to do if they like the overall performance of a company, but don’t want to risk putting a lump sum in its stock the very minute prices temporarily go through the roof? Enter dollar-cost averaging—it’s a way of reducing risk by regularly buying a specific dollar amount of an investment over a period of time and removing the need to time the market. This way, you can invest a large amount of money bit by bit. And since market prices fluctuate, spreading out your investment can help you take advantage of the average price over a period of days, weeks, or months. Remember, it is about time in the market, not timing.

If you’d like to take a deeper dive into dollar-cost averaging, Stash Learn has you covered.

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