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When Dollar-Cost Averaging Can Help (or Hurt)

A systematic investing approach doesn't usually improve returns, but it can help in certain situations.

Personal finance writers often extol the virtues of dollar-cost averaging, which involves investing consistent dollar amounts over time instead of all at once, as a way of improving investment outcomes.

But the notion that dollar-cost averaging improves returns has been pretty thoroughly debunked. The reason is simple: If returns are generally positive, you're better off having more dollars working for you instead of holding them back to invest over time. Statistically speaking, the market goes up more often than it goes down, so keeping money off to the side usually doesn't help.