Dollar cost averaging is a tried and proven way to accumulate securities over time. Whether the security is a stock, a mutual fund, or an index fund, dollar cost averaging removes the market emotion and helps to keep the investor on the straight and narrow course of accumulating wealth to prepare for the rainy days to come.
Dollar cost averaging is really a special case of cost averaging. Another special case of cost averaging is Euro cost averaging. Euro cost averaging is buying regular amounts of a stock, mutual fund, or index fund over time using Euros instead of dollars.
It might behoove American investors to use the term cost averaging instead of dollar cost averaging. Unfortunately too many American investors are thinking too much in terms of their home currency, the US dollar. But with the dollar weakening everyday Americans need to think about diversifying into other currencies and cost averaging from these currencies into their security positions.
Currencies come and go but cost averaging is here to stay.
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