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Risk & Money

Dollar-Cost Averaging

Dollar-cost averaging is buying a fixed amount of an asset at regular intervals regardless of its price.

Also known as: DCA

Instead of buying once, a DCA investor spends the same amount every week or month. When the price is low the amount buys more coins and when it is high, fewer, so the average cost lands between the extremes and the risk of picking one bad moment to buy shrinks.

DCA does not beat a lump sum when prices rise steadily, because the money arrives late; it beats it when they fall. Test it on real prices with the DCA calculator and read DCA versus lump sum.

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