Constant Dollar Plan

A constant dollar plan, also known as dollar-cost-averaging, is an investment strategy that’s useful for accumulating shares of one company over time. Under the system, you invest a fixed amount of capital on a routine basis regardless of how many shares your money will buy. You’ll buy more shares when the price is low and fewer shares when the price is high. The strategy can lower your investment risk by ensuring that you don’t buy your entire position at the worst possible time -- when the stock is at its highest level. Also, your average price usually will be lower than if you purchased a constant number of shares at regular intervals.