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Dollar Cost Averaging

Radio Transcript, 60 seconds, for use during week of September 10.

This is an Invest Wisely minute brought to you by Iowa State University Extension.

Here’s a way to eliminate the guesswork of deciding when to invest -- use dollar cost averaging.  This provides you with some protection from fluctuating markets.  Using this approach, you consistently invest small amounts over a long period of time, for example $100 a month for 5 to 10 years. 

No load mutual funds that don’t charge sales fees can be a good choice for dollar cost averaging.  This way you avoid the commissions involved in routinely purchasing individual stocks.

The key to dollar cost averaging is consistent investing, no matter what the market is doing. 

Invest Wisely comes from Iowa State University Extension through a grant from the Investor Protection Trust providing investor education on the web at investorprotection.org.

 
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Updated September 10, 2007