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What is dollar-cost averaging?

Dollar-cost averaging is a way to help reduce the risk of timing the market. It means regularly buying a fixed dollar amount of an investment. For example, if you want to invest $100 in one fund, you could invest it all now. But you would be taking a risk that the investment, or the market as a whole, might drop in value over the coming months.

With dollar-cost averaging, you can invest the hundred dollars in smaller amounts over a period of time, taking advantage of prices being lower and higher at different times. Dollar-cost averaging helps you take advantage of the average price of an investment over days, weeks, or months.

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