Ask a Fool: Should I Buy Stocks All at Once or Use Dollar-Cost Averaging?

Many investors buy shares via dollar-cost averaging, which means investing an equal amount of money into a stock at predetermined time intervals. For example, instead of investing your $5,000 all at once, you might choose to invest $1,000 every month for the next five months.

To be sure, dollar-cost averaging has some major advantages. It helps take emotion out of your investment strategy and lowers the risk of buying while a stock is too expensive. By investing equal dollar amounts, you'll buy fewer shares when the stock is expensive and more when it's cheaper. Over time, the mathematics work out in your favor.

On the other hand, the downside is that dollar-cost averaging prevents you from being opportunistic.

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