Over time the difference is small—pick what you'll stick with.

Dollar-cost averaging

📈 Economics By CampusDown Wiki Editorial Team Last updated October 26, 2026 Views 1

Dollar-cost averaging means investing a fixed amount at regular intervals, regardless of price, instead of trying to time the market.

Contents

1. Why your average cost drops
2. Does it beat lump sum?
3. FAQ
4. References

Why your average cost drops

Investing $500 every month buys more shares when prices are low and fewer when they're high, so your average cost lands below the average price. Pair it with an index fund and you can stop worrying about timing. If you contribute to a 401(k) every paycheck, you're already doing it.

Does it beat lump sum?

Vanguard found that investing a windfall all at once beat spreading it out about two-thirds of the time, because markets tend to rise. Still, DCA softens the regret of buying right before a crash and keeps money working through compounding.

FAQ

Can I lose money with DCA?: Yes, in a long bear market.
Weekly or monthly?: Over time the difference is small—pick what you'll stick with.

Sources reviewed: 2026-10-26

References

Constantinides, G. M. (1979). A note on the suboptimality of dollar-cost averaging as an investment policy. Journal of Financial and Quantitative Analysis, 14(2), 443–450.
Vanguard Research. (2012). Dollar-cost averaging just means taking risk later.

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This article was last updated on October 26, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.