Answer:
Dollar-cost averaging has the advantage that investments are made at regular intervals, such as the first of every month.
Step-by-step explanation:
What is dollar-cost averaging?
When used as an investing strategy, dollar-cost averaging can lead to continuous wealth creation while lowering the danger of timing the market's ups and downs incorrectly, which could result in the worst possible investment outcomes—buying high and selling low. More generally, it helps investors profit from the long-term upward trend of markets by reducing the impact of the unavoidable price volatility in shares.
How dollar-cost averaging work?
Consider this hypothetical example of investing in shares of Company A, with a regular sum of $1,000 invested on the first day of each month for one year at the market price. This will demonstrate the impact of dollar-cost averaging.