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Dollar-Cost Averaging (DCA)

An investing approach where the investor commits a fixed dollar amount on a fixed schedule (weekly, monthly), regardless of market price — smoothing entry-price across cycles.

What it actually means

DCA contrasts with lump-sum investing (one large deposit immediately) or market-timing (waiting for "the right moment"). The case for DCA: it removes timing decisions from the investor's discretion, smooths out volatile entry prices, and is psychologically easier to sustain through drawdowns. The case against: in markets that trend up over time, lump-sum investing tends to outperform DCA because more dollars get more time in the market.

Distinguishing it from look-alikes

DCA is a behavioral tool more than a return-maximizing tool. The studies showing lump-sum beats DCA on average are correct on raw return — but ignore that many investors who mean to lump-sum end up never investing because of timing anxiety. DCA's real value is that it gets investors invested. Educational only — verify with your specific situation.

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Examples

401(k) contribution
Every paycheck contribution is automatic DCA — the canonical real-world example.
Bitcoin / equity index DCA
Weekly auto-purchase of $X of an asset, regardless of price.
Roth IRA monthly
Monthly contribution into a target-date fund or index ETF — DCA by default.
HowTo schema
Eligible for step-by-step rich results AND structured for AI extraction
llms.txt
Standard for declaring AI-crawler-friendly content + which AI agents are explicitly welcomed