We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for .
Editorial Integrity
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
How We Make Money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
The stock market is unpredictable, making investing a tricky endeavor. You can get around some of the uncertainty by using dollar-cost averaging when investing.
What is dollar-cost averaging?
Dollar-cost averaging is investing a particular amount of money on a regular schedule over the long term, regardless of how the market is doing. Your shares are cheap in a down market and more expensive in an up market. When planning retirement, this is a useful tool that can help you meet your retirement goals.
How it works
Let’s say that you plan to invest $100 a month for three months. The first month shares of ABC fund cost $10 each, so you get 10 shares. Then shares double the second month to $20 per share, so you get five shares. The third month shares are at $25, so you get four shares. At the end of three months, you have 19 shares for a total investment of $300. Because shares are now trading at $25, you have a profit of $175, a figure arrived at by multiplying 19 by $25 and subtracting your $300 investment. Your average cost for fund shares was about $16.
Of course, in reality, fund shares are not likely to rise that quickly in such a short time span. But as you can see, dollar-cost averaging typically nets more reliable yields than you would see if you dropped a lot of money in the market all at once. With a lump sum, you could lose a large portion of your money if the market headed south shortly after you invested.
Where to use it
Dollar-cost averaging is commonly used among those who are planning retirement by investing regularly in tax-favorable retirement vehicles. One example of this would be to have money directed from a savings account to an IRA each month. The same is true with a company retirement plan. Generally, you can elect to have a set amount automatically deducted from your paycheck and contributed to funds in your 401(k) plan.
Share