What is the general outcome of a dollar-cost averaging investment strategy?

The outcome of a dollar-cost averaging investment strategy generally leads to the average price of the securities purchased being lower than the average cost over time. This strategy involves consistently investing a fixed amount of money at regular intervals, regardless of the price of the securities.

As prices fluctuate, the fixed investment buys more shares when prices are low and fewer shares when prices are high. Over time, this creates an average cost per share that is lower than the average market price when considering the total investment made, especially in a volatile market. Essentially, dollar-cost averaging helps investors reduce the impact of volatility and market timing on their investments, often resulting in a favorable average cost basis relative to the market price.

This understanding is crucial in grasping the advantages of a dollar-cost averaging strategy, as it emphasizes the potential for being able to purchase shares at varying prices and thus achieving a net benefit in terms of cost efficiency in long-term investing.