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What is dollar-cost averaging?

“Buy low, sell high” – if only timing an ever-changing market were that easy. 

Instead of attempting to make the perfect trade, some investors have turned to long-term investing approach known as dollar-cost averaging.

In short, dollar-cost averaging calls for investors to buy an equal dollar amount of an asset in regular intervals (i.e. every week, 2 weeks, or month). By buying shares of stock or units of crypto in this way, you do not have to make important financial decisions while battling emotional highs and lows. 

For example, a parent might buy $25 worth of Ethereum, a cryptocurrency, every Tuesday, beginning July 2022 and ending July 2023. Regardless of whether price of 1 ETH is higher or lower this period than it was last, the parent will buy $25 dollars worth of Ethereum. The parent will buy a slightly different amount of ETH every week, as the price of ETH goes up and down. However, by buying consistently, the parent avoids the stress that comes with trying to time the market, all while leaving funds available to buy crypto when the price of ETH is more attractive.

Try this technique out in the UNest app. Crypto is available for purchase to UNest Plus members.

 

This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. While information and sources are believed to be accurate, UNest does not guarantee the accuracy or completeness of any information or source provided herein and is under no obligation to update this information.