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What is Dollar Cost Averaging (DCA)?
डॉलर कॉस्ट एवरेजिंगDCA is an investment strategy where you invest a fixed amount at regular intervals regardless of price. It reduces the impact of volatility and removes the need to time the market.
Full Explanation
Dollar Cost Averaging (DCA), or Rupee Cost Averaging in India, is a strategy where you invest a fixed amount (e.g., ₹5,000) into an asset at regular intervals (weekly, monthly) regardless of the current price. When prices are low, you buy more units; when high, you buy fewer. Over time, this averages out your cost basis, reducing the risk of buying at a peak. DCA is especially effective in volatile markets like crypto, where timing the market is nearly impossible for beginners.
Example
Investing ₹5,000 monthly in Bitcoin for 3 years (a "Bitcoin SIP") would give you a lower average cost than trying to time the market. Use Fedha Academy's SIP Calculator to see projected returns.