# Introduction to Dollar-cost Averaging

Dollar-cost averaging is a systematic investing technique used to accumulate shares of stock over many month or years. You invest a specified amount of money to buy shares at a regular interval, say each month, and then you hold them for the long term.

Here is a simple example of dollar-cost averaging. Suppose you invest \$100 each month for five months to buy shares of a stock. Assuming that you paid \$50, \$52, \$58, \$56 and \$61 for month one through month five, you would have bought 2, 1.923, 1.724, 1.786 and 1.639 shares respectively.

After five purchases the total amount invested is \$500 and you own 9.072 shares. Therefore, the average cost per share is \$55.11 (\$500/9.072). As of the last month, the 9.072 shares are worth \$553.41.

Use the Dollar-cost Average Calculator to see how dollar-cost averaging performs with any stock.

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