What is dollar cost averaging?

Sound familiar? If you’ve ever agonized over when you should invest, you may have come to realize it is hard for an individual investor to try to time the markets. Another strategy? Dollar cost averaging.

Consistency vs. timing

It sounds technical, but dollar cost averaging is quite simple: you invest a consistent amount, week after week, month after month (think payroll contributions going into your 401(k) account) regardless of whether the markets are up, down, or sideways. No guesswork and no timing necessary.

Autopilot investing at work.

Let’s assume you invest $100 a month into a mutual fund. The fund’s share price changes from month to month so the number of shares your money can buy also goes up and down each month.

At the end of six months, you’ve invested $600 and own 61 shares.1 The average share price over those six months was $10.33, however you paid less – only $9.83 per share because you were able to buy more shares each time the share price went down.

For illustrative purposes only.

If you had invested that same $600 all at once in month one, you would have gotten only 50 shares (at $12 a share) for your money. Of course, if you had invested your $600 in month five when the share price was down to $8, you’d own 75 shares. But no one can accurately pick when that low point will happen with every investment they own every time. Even the experts don’t have a crystal ball. That’s why dollar cost averaging is preferred by so many investors. You invest the same dollar amount each month and let the law of averages take over.

Interested in having a professional assess your investment strategy?

If you participate in a retirement plan through the ABA Retirement Funds Program (“Program”), you can connect with an investment advisor from Voya Retirement Advisors (“VRA”) who can provide you with advice on your Program account investments, Professional Management, and a personalized Retirement Evaluation.3 If you enroll in the Professional Management program, VRA representatives will manage your Program account. There is an additional fee for the service, based on your account balance. Call 800.348.2272 for more information. The call is free and there is no obligation to enroll in the service. You can cancel the service whenever you like.


Dollar cost averaging cannot guarantee a profit or prevent losses in declining and volatile markets. Investors should consider their financial ability to continue their purchases through periods of low-price levels.

1 Shares purchased have been rounded to the next whole share.

2 Advisory Services provided by Voya Retirement Advisors, LLC (“VRA”). VRA is a member of the Voya Financial (“Voya”) family of companies. For more information, please read the Voya Retirement Advisors Disclosure Statement, Advisory Services Agreement and the ABA Retirement Funds Program’s (“Program’s”) Fact Sheet. These documents may be viewed online by accessing the advisory services link(s) through the Program’s website at www.abaretirement.com after logging in. You may also request these from a VRA Investment Advisor Representative by calling the Program’s information line at 800.348.2272. Financial Engines Advisors L.L.C. (“FEA”) acts as a sub advisor for VRA. FEA is a federally registered investment advisor. Neither VRA nor FEA provides tax or legal advice. If you need tax advice, consult your accountant, or if you need legal advice, consult your lawyer. Future results are not guaranteed by VRA, FEA or any other party, and past performance is no guarantee of future results. Edelman Financial Engines® is a registered trademark of Edelman Financial Engines, LLC. All other marks are the exclusive property of their respective owners. FEA and Edelman Financial Engines, L.L.C. are not members of the Voya family of companies. ©2023 Edelman Financial Engines, LLC. Used with permission.

This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. We recommend that you consult an independent legal or financial professional for specific advice about your individual situation.

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