Dollar Cost Averaging Law and Legal Definition

Dollar cost averaging is an investment strategy and involves the method of purchasing assets by investing a fixed amount of dollars at set intervals. This method automatically buys more of the asset when the prices are down. In other words, as prices rise, fewer units are bought, and as prices fall, more units are bought. This is also called constant dollar plan.

Dollar cost averaging is an economic practice of investing equal sums of money at regular intervals thereby reducing the risk of huge investments during inappropriate time.