How can dollar-cost averaging reduce the impact of market volatility for long-term investors?

Dollar-cost averaging is an investment strategy where an investor consistently invests a fixed amount of money into a particular asset at regular intervals, regardless of the asset's price. This approach helps reduce the impact of market volatility by spreading the investment over time. When prices are high, the fixed amount buys fewer units, and when prices are low, it buys more units. Over time, this can lower the average cost per unit compared to investing a lump sum all at once. Dollar-cost averaging encourages disciplined investing and reduces the emotional response to market fluctuations. It is particularly beneficial for long-term investors aiming to build wealth gradually without trying to time the market.