Which practice involves investing fixed amounts at regular intervals to mitigate market volatility?

• A. Dollar-Cost Averaging
• B. Robo-Advisor
• C. Active Investing
• D. IPO (Initial Public Offering)

Answer: (A)

Investing a fixed amount at regular intervals to smooth out price differences over time is dollar-cost averaging. By contributing a set amount on a regular schedule, you buy more shares when prices are low and fewer when prices are high. This can lower your average cost per share and reduce the impact of short-term market swings, helping you stay disciplined and focused on long-term goals rather than reacting to volatility. It’s a straightforward way to automate investing and avoid trying to time the market. Other options describe different ideas: a robo-advisor is an automated service that builds and manages a portfolio for you; active investing involves selecting investments and sometimes timing the market; an IPO is when a company first sells its stock to the public.