Dollar Cost Averaging

So, let’s say you have $10,000 to invest (I wish I did, too). You could buy $10,000 worth of a stock -- all at one time -- and hope the value goes up. Or you could purchase shares of a stock in smaller bunches over a longer period time to increase your odds of buying at a lower price — and to decrease your market risk.

This tactic is called dollar cost averaging, and it could save you a lot of dough in losses should your stock choice crash. Still not making much sense? Let’s look at this idea a little closer, with a hypothetical example.