How to Make Money with Dollar Cost Averaging

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By Julie Mayfield
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Buy low, sell high. It's the rule of making money when investing in the stock market. You can accomplish buying low and selling high when you invest using Dollar Cost Averaging.

Dollar cost averaging works by automatically purchasing less of an investment when the price is high and more of it when the price is low. That is how you are able to make money with dollar cost averaging.

Difficulty: Easy

Instructions

Step 1

Choose a set amount of money that you want to invest on a regular basis.

While you can choose to invest daily, weekly, monthly, or even annually, monthly investing works for most average investors and is ideal for dollar cost averaging.
Step 2

Choose an investment in which to invest the money in step one.

Common investment choices include shares of an individual stock and mutual funds, but any investment in which the price fluctuates will work for dollar cost averaging.
Step 3

Automate your investment

Dollar cost averaging only works when you invest regularly and automating your investment is a great way to do this. Mutual funds companies or your broker can arrange to have the money automatically transferred and invested each month.

Tips & Warnings

Continue to do research on your investments. While it's a way of maximizing your returns, dollar cost averaging will not eliminate the risk associated with your investments.