In this chapter we will discuss the advantages of long-term investing and the use of a dollar-cost averaging (DCA) strategy, particularly when investing in ETFs.

1️⃣ Long-term investing

Long-term investing involves holding assets for an extended period, usually several years or more.

This approach can potentially lead to higher returns, as it allows investors to overcome short-term market fluctuations and benefit from overall market growth.

Long-term investing can be particularly suitable for investors in ETFs, as ETFs are designed to provide broad market exposure and track the performance of an underlying index over time.

2️⃣ Dollar Cost Average

DCA is an investment strategy in which an investor consistently invests a fixed amount in a specific investment (such as an ETF) at regular intervals, regardless of the price of the asset.

This approach distributes the investment over time, attenuating the impact of market fluctuations on the overall investment.

By using DCA, the investor can avoid trying to anticipate the market and instead focus on building his or her investment over the long term.

✅ Benefits of Dollar-Cost Averaging:

1. Reduces the impact of market volatility: By regularly investing a fixed amount, investors can avoid the potential pitfalls of market timing, such as buying at highs or selling at lows.
2. Reduces average cost per share: As more shares are bought when prices are low and fewer shares are bought when prices are high, the average cost per share is reduced over time.
3. Encourages disciplined investing: DCA promotes a systematic approach to investing, which can help investors stay focused on their long-term goals and resist the temptation to make emotional investment decisions.

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Guide - How to buy an ETF

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