Dollar-Cost Averaging (DCA)
Dollar-cost averaging (DCA) means investing a fixed dollar amount on a regular schedule (like monthly), regardless of price, rather than investing a lump sum all at once.
Why it matters
- DCA naturally buys more shares when prices are low and fewer when prices are high, smoothing out your average cost.
- It's the default approach for most people investing from a paycheck rather than a lump sum.
- For an existing lump sum, research suggests investing immediately has historically outperformed DCA more often than not — see our Vanguard research summary.
Simple example
- Investing $500 on the first of every month, regardless of whether the market is up or down that day, is a form of DCA.
- Automating contributions from every paycheck into an investment account is DCA by default.