How often should I invest using DCA?

Monthly or biweekly schedules work best for most pay cycles.

Does DCA guarantee profit?

No, but it reduces timing risk and smooths returns.

Is DCA better for ETFs or stocks?

ETFs are ideal—they provide diversification so you aren’t averaging into single-stock risk.

Dollar-Cost Averaging Strategy

Educational only — not financial advice. Updated 2025.

1. What Is Dollar-Cost Averaging?

Dollar-cost averaging (DCA) means investing a fixed amount on a regular schedule—monthly or biweekly—regardless of market conditions. It smooths out purchase prices and reduces the temptation to time the market.

2. Why It Works

Because markets are volatile, lump-sum investing can feel risky. DCA adds discipline and emotion control. It ensures you buy more shares when prices are low and fewer when prices are high, reducing average cost per share over time.

3. Practical Example

If you invest $500 every month into an ETF, you accumulate more units when the market dips and fewer during rallies. Over several years, this evens out volatility and builds consistent habits.

4. Benefits

Behavioral benefits are often the biggest: consistent investing, less stress, and fewer impulsive trades. DCA also automates your plan, aligning with long-term compounding.

5. Drawbacks

DCA may lag lump-sum investing statistically if markets rise steadily, since some cash stays uninvested early on. But the emotional comfort of gradual entry often outweighs minor mathematical underperformance.

6. How to Implement DCA

Set up automatic contributions in your brokerage or robo-advisor (e.g., Wealthsimple, Questrade). Choose diversified ETFs or index funds. Stay consistent—skip market predictions.

7. DCA vs Lump Sum

Studies show lump-sum investing wins slightly two-thirds of the time, but DCA wins psychologically nearly always. The best approach is the one that keeps you invested.