Dollar Cost Averaging – Good, Bad or Indifferent?
Jun 24th, 2009 | By Charles L. Stanley CFP® ChFC® AIF® | Category: 2nd Quarter (Age 20-40)
Ken French
A common theme among new investors is “Dollar Cost Averaging”. Is this a good idea? Well, if it is the only way for you to get invested, than I t hink I would say, “Yes.” But what if you have a sum of money, say $10,000, that is available for investment and your goal for the money is to be 100% in equities (stocks)? Should you invest all $10,00 at once or should you spread it out over a few months?
Ken French, The Carl E. and Catherine M. Heidt Professor of Finance at the Tuck School of Business at Dartmouth College has some thoughts that will shed some light on this question. You can view his video at the Fama/French Forum.
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