Dollar-cost averaging, or DCA, is a term frequently used in the financial industry. It refers to a practice in which stocks and investments are paid for in smaller, regular payments over time. This helps avoid market fluctuations that can occur due to single, high-cost payments/investments. To use dollar-cost averaging, the total cost of the investment is divided into equal amounts and then paid over a pre-determined amount of time.
What Small and Midsize Businesses Need to Know About Dollar-Cost Averaging (DCA)
Dollar-cost averaging is an investment strategy that is often used by SMB owners that want to invest in stocks. By adopting this method, they can avoid the volatility of the market since they will make regular purchases during both market highs and market lows.
Related Terms
- Compound Annual Growth Rate (CAGR)
- Financial Planning and Analysis (FP&A)
- Selling General and Administrative (SG&A) Expenses
- Hedge Fund
- Gateway
- Record to Report (R2R)
- ROIT (Return on Information Technology)
- Chief Revenue Officer (CRO)
- SAC (Subscriber Acquisition Cost)
- ROE (Return on Equity)
- Tokenization
- Net Present Value
- Fintech
- Financial Management System (FMS)
- Business Capability Modeling
