How does dollar-cost averaging work?

Dollar-cost averaging is an investment strategy where you invest a fixed amount of money at regular intervals, regardless of the asset's price. For example, you might invest $500 in stocks every month, whether the market is up or down. This approach helps reduce the risk of making a large investment at an inopportune time, such as when stock prices are high. Over time, dollar-cost averaging can lower the average cost per share since you'll buy more shares when prices are low and fewer when prices are high. This strategy can smooth out the effects of market volatility and may be ideal for long-term investors.