Which investment strategy involves investing equal amounts of money at regular intervals?

Which investment strategy involves investing equal amounts of money at regular intervals?

• A. Dollar-cost averaging
• B. Value investing
• C. High-frequency trading
• D. Growth investing

Answer: (A)

The investment strategy that involves investing equal amounts of money at regular intervals is known as dollar-cost averaging. This approach helps investors mitigate the effects of market volatility by spreading the investment over time, rather than investing a lump sum all at once. By consistently investing the same amount, regardless of market conditions, investors can potentially lower the average cost per share over time, leading to a more favorable investment position. This strategy also encourages discipline in investing, as it removes emotional decision-making based on market fluctuations. Instead of trying to time the market, investors benefit from making investments consistently, building their portfolio gradually through regular contributions. This can be particularly advantageous in a fluctuating market, where prices can vary significantly from one period to the next. In contrast, the other options, such as value investing, high-frequency trading, and growth investing, represent different strategies that do not inherently focus on the timing and uniformity of investment amounts in the same way that dollar-cost averaging does. Value investing seeks to identify undervalued stocks, high-frequency trading relies on making numerous trades at very high speeds, and growth investing focuses on stocks expected to grow at an above-average rate. Each of these approaches has its own unique characteristics and objectives, setting them apart from the systematic nature of

The investment strategy that involves investing equal amounts of money at regular intervals is known as dollar-cost averaging. This approach helps investors mitigate the effects of market volatility by spreading the investment over time, rather than investing a lump sum all at once. By consistently investing the same amount, regardless of market conditions, investors can potentially lower the average cost per share over time, leading to a more favorable investment position.

This strategy also encourages discipline in investing, as it removes emotional decision-making based on market fluctuations. Instead of trying to time the market, investors benefit from making investments consistently, building their portfolio gradually through regular contributions. This can be particularly advantageous in a fluctuating market, where prices can vary significantly from one period to the next.

In contrast, the other options, such as value investing, high-frequency trading, and growth investing, represent different strategies that do not inherently focus on the timing and uniformity of investment amounts in the same way that dollar-cost averaging does. Value investing seeks to identify undervalued stocks, high-frequency trading relies on making numerous trades at very high speeds, and growth investing focuses on stocks expected to grow at an above-average rate. Each of these approaches has its own unique characteristics and objectives, setting them apart from the systematic nature of