What Is Dollar Cost Averaging?

Business executive and entrepreneur Krishen Iyer possesses previous experience as the chief executive officer of Iyer Health Shield. Currently, he serves as a real estate developer and owner of a real estate firm in Fresno, California. In his free time, Krishen Iyer enjoys reading books and closely follows authors such as Bill O’Riley and Warren Buffet.

Investment expert and business executive Warren Buffett was born in Nebraska in 1930. Known as the Oracle of Omaha for his investing success, Chairman of the international holding company Berkshire Hathaway, his investment philosophy includes three major principles: a focus on income generation and reinvestment, innovation, and dollar cost averaging.

Dollar cost averaging is an investment approach in which a specific dollar amount is invested in a security at regular intervals regardless of the current market price. The strategy, which allows more shares to be purchased when prices are down and less when prices are up, decreases the average cost of an investment over time. Dollar cost averaging is common with investors that have long investment horizons, as it decreases the need to try to time the market.