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Analyzing companies

Lesson 71 · Written for kid, teen, and little

Dollar-cost averaging

The same planned amount at regular times means fewer timing decisions.

The idea

Dollar-cost averaging (DCA) means investing the same planned amount at regular intervals — for example, every month — regardless of the price. When prices are lower your money buys more shares; when they are higher it buys fewer. This spreads purchases across different prices and removes the need to choose a new buying time for every payment. It does not guarantee a profit or protect against losses. Choose an affordable amount and review the plan if your needs change.

A

Words to know

4

Dollar-cost averaging (DCA)

Investing the same fixed amount on a fixed schedule regardless of price. $50 on the first of every month, whether the market is up or down.

Time in the market

How long your money is invested — the single strongest driver of long-term returns. Starting at 15 instead of 25 gives compounding ten extra years to work.

Market timing

Trying to choose favorable times to buy or sell. Future prices are uncertain; a fixed schedule reduces the need to choose a new buying date for each contribution.

Lump sum

Investing an available amount at once, such as $2,000 in one purchase, instead of spreading it across time. Which approach does better depends on later prices and timing.

Try it — no accountDrag and watch

$100/month, 7% real return. Slide the years — this is the boring winning strategy.

You'd have

$31,881

Aim for this or more

$200,000

$100 a month. Assume a 7% annual rate after inflation, divided by 12 for monthly compounding, with payments at the start of each month. This is a projection, not a promise.

Years DCA-ing

15 yrs

Get to 40 years. That's a first job at 22 → 62.

Drag a slider to see the shape.

In the full lesson

  1. 1Read the chart
  2. 2Drag and watch
  3. 3Make the call

Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.

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