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Investing & the Stock Market vocabulary · Portfolio & Risk

Dollar-cost averaging

Meaning in investing & the stock market, with examples

/ˌdɑːlər kɔːst ˈævərɪdʒɪŋ/nounCommon term

In investing & the stock market, dollar-cost averaging means: Investing the same amount of money at regular intervals, whatever the price, so that you buy more units when prices are low and fewer when they are high.

In Turkish: düzenli yatırım, maliyet ortalaması, kademeli alım

How it is used

A common approach for monthly saving plans and pension contributions. It reduces the risk of investing everything at a bad moment, although a single lump sum can do better when markets rise steadily. British texts sometimes call it 'pound-cost averaging'.

Example sentences

  1. Dollar-cost averaging helped me keep investing during the bear market.

  2. With dollar-cost averaging, she puts 5,000 lira into the same index fund on the first day of every month.

Common collocations

  • use dollar-cost averaging
  • dollar-cost averaging strategy
  • regular investment plan
  • lump sum
  • passive investingA strategy of buying funds that follow a market index and holding them for a long time, rather than choosing individual stocks or timing the market.
  • index fundA fund that aims to match the performance of a market index by holding the same securities in the same proportions, instead of trying to beat it.
  • volatilityHow much and how quickly the price of an investment or a market moves up and down. High volatility means large, frequent price swings.
  • asset allocationThe way an investor divides money between different types of assets, such as shares, bonds, gold and cash, based on goals, time and attitude to risk.

More terms: Portfolio & Risk

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This page explains English vocabulary for learners. It is not financial advice.