What is dollar cost averaging in investing?

Dollar cost averaging is an investment strategy where you invest a fixed amount of money at regular intervals, regardless of the asset's price. For example, you might invest $200 every month into a stock or index fund, whether the market is up or down. The key benefit is that you automatically buy more shares when prices are low and fewer shares when prices are high, which can lower your average cost per share over time. It also removes the pressure of trying to time the market perfectly. This strategy is commonly used in retirement accounts like 401(k)s, where contributions are made consistently from each paycheck. It's considered a disciplined, lower-risk approach suited for long-term investors.