Savings & Investing · Glossary
Dollar-cost averaging
Investing a fixed amount on a regular schedule regardless of price, so you buy more shares when prices are low and fewer when they're high.
Contributing the same amount from each paycheck to a 401(k) is dollar-cost averaging by default. It removes the temptation to time the market and smooths out the price you pay.
When you already have a lump sum, research generally finds that investing it all at once beats spreading it out about two-thirds of the time, because markets rise more often than they fall. Spreading it out mainly reduces regret if prices drop right after you invest.
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Disclaimer: Definitions are general education, not financial, tax, or legal advice. Figures are for the 2026 tax year unless noted.