Dollar Cost Averaging - DCA

CORE DEFINITION

Dollar Cost Averaging (DCA), also known as the "lazy man's investment method" or "periodic fixed-amount investment method," is an investment term that refers to a strategy of buying a fixed amount of a certain asset at specific intervals (e.g., once a month). The purpose of DCA is to mitigate the negative impact of asset volatility on the investor's final returns. DCA involves investing a fixed amount of money at regular, mechanical intervals into a specific asset (such as stocks, funds, foreign exchange, commodities, etc.) rather than investing all funds at once. In this way, even if the asset declines after purchase, the investor's loss is less than that of a lump-sum purchase because not all funds are invested, and later purchases at lower prices can further reduce the average cost. Thus, investors using DCA can not only accumulate investment capital but also eliminate "market timing" from their decision-making factors, entering the market in batches to reduce the risk of investing at a single point in time, allowing investors to avoid waiting for or guessing the so-called right time, and not needing to choose when to enter or exit the market.