This is a strategy that spreads out your fund or stock purchases at regular intervals and in roughly equal amounts. When it is done effectively, it can have great benefits for the portfolio. The main reason this happens is that the dollar cost averaging smoothens the purchase price over time and ensures that you are not dumping your money in a high point for the prices.
This strategy can be powerful in the bear market, thus allowing you to purchase the dips of the purchase stock at low points when most investors fear to purchase. When you commit to this strategy, it means that you may be investing in when the stock or market is down.
