Why Do Some Investors Use Dollar-Cost Averaging?

There are many reasons why some investors decide to use Dollar-Cost Averaging. But the main reason or at least one of the main reasons are that dollar-cost averaging reduces the effects of investor psychology and market timing on their portfolio.

By using the dollar-cost averaging approach, it allows  investors to avoid the risk that they will make counter-productive decisions out of fear. Just like buying more when prices are rising or panic-selling when prices decline.

Dollar-cost averaging in a way forces investors to focus on contributing a set amount of money each period while ignoring the price of each individual purchase.

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