The Power of Investing Regularly

To reach most financial goals, you may have to invest diligently for several years, if not decades. Regular investing through a strategy called dollar-cost averaging may help keep you on track. The principle is simple: Invest the same amount of money each month or quarter, no matter what the market is doing.

Through dollar-cost averaging, you'll buy more shares when the market is declining and fewer shares when it's heading up. In other words, your average price per share may be lower than the market average over that period.

Dollar-Cost Averaging vs. Making a One-Time Investment

Dollar-Cost Averaging...

Month	Amount Invested	Share Price	Shares Purchased
Jan	$200	$12	16.6	- When prices are high, your investment buys fewer shares
Feb	$200	$10	20.0
Mar	$200	$9	22.2
April	$200	$8	25.0	- And when share prices are low, your investment buys more shares
May	$200	$12
Total	$1,000	$10.20	100.4
Market Value:			$1,204

One-Time Investment

Month	Amount Invested	Share Price	Shares Purchased
Jan	$1,000	$12	83.4
Feb	$0	$10	0 - You invest the same amount of money but get 100 shares at $10.20 per share vs. only 83 shares at $12 per share.
Mar	$0	$9	0
April	$0	$8	0
May	$0	$12	0
Total	$1,000	$12	83.4 - The result: Your investment is worth more because your money bought more shares
Market Value:			$1,000

Although dollar-cost averaging can be a very effective way to build your portfolio over time, you should be aware that it doesn't ensure a profit nor prevent loss. You should also take a close look at your financial resources and assess whether you'll be able to contribute to your account on a regular basis. If you can manage to apply dollar-cost averaging to even a small amount of money, consider doing so. Even if you invest only a small amount on a regular basis, you will still be investing in a very disciplined manner that may help achieve your goals.