What characterizes dollar-cost averaging in investment?

Dollar-cost averaging is characterized by making consistent investments of equal amounts of money at regular intervals regardless of the market price at that time. This strategy allows investors to buy more shares when prices are low and fewer shares when prices are high, thereby averaging the cost of their investments over time.

By investing equal sums regularly, investors can mitigate the impact of volatility in the market. This approach reduces the risk of making poor investment decisions based on market timing, as it encourages a disciplined and systematic investment strategy. Over the long term, dollar-cost averaging benefits from market fluctuations, as it helps investors avoid the pitfalls of trying to predict short-term market movements.