Question 8
Dollar-cost averaging (DCA) is a strategy where you invest a fixed dollar amount at regular intervals (monthly, weekly) regardless of the asset's price. Over time DCA causes you to buy more shares when prices are lower and fewer when prices are higher, which can reduce the average cost per share compared with trying to time a one-time lump-sum purchase -- especially if prices are volatile. DCA is popular for new investors because it reduces the emotional stress of market timing and builds a saving habit. It's not a guaranteed path to higher returns versus lump-sum investing, but it does manage behavioral risk. This question checks whether you can identify the DCA idea.
What is dollar-cost averaging?
Did You Also Know...
By Wise Wallet
The Rule of 72 gives a quick estimate of how many years it takes to double money: divide 72 by the annual interest rate.