Dollar-Cost Averaging (DCA)
DCA means investing a fixed amount on a regular schedule (for example monthly), instead of trying to pick one perfect entry date.
Why this matters
DCA can reduce regret from bad timing and helps build consistency. It does not guarantee better returns, but it can make behavior easier to sustain.
Simple example
You invest $500 on the first business day of every month for two years, regardless of whether the market is up or down.
Common mistakes
- Stopping contributions after a drawdown and restarting only after prices recover.
- Assuming DCA always beats lump sum in every market period.
- Ignoring fees or taxes when contribution sizes are very small.