Make Money with Dollar Cost Averaging

Dollar cost averaging is a wonderful tool that allows for easy, simple investments into the stock market that will generally make you money in the long run. Dollar cost averaging works by investing a set some of money into a certain stock at the same time each month. Due to fluctuations in the stock market, this will cause you to sometimes be purchasing the stock at a higher price, and sometime at a lower price. At first this may seem crazy, why on earth would anyone want to buy a stock at a higher price?

The answer lays in the fact that statistically the stock market has always risen over time. Sure, sometimes there are small corrections, and in extreme cases maybe even recessions, but in the longer term these small dips become completely irrelevant as the price continue to march higher and higher. The beauty of dollar cost averaging is that by investing a set amount, say one thousand dollars per month, you are building a habit of investing your money into the stock market.

You no longer need to research certain stocks for hours at a time before each purchase. You no longer need to play the market timing game of waiting for days and days for a price drop that never comes. Dollar cost averaging can even be set up automatically from most bank and brokerage accounts, you wouldn't need to do anything in order to realize the gobs of profit that the best money making machine available to the average person is known for.

Dividend reinvestment can be considered a twin cousin of dollar cost averaging. If you own stocks that pay a dividend, then reinvesting this dividend into more stock would accomplish the same as dollar cost averaging would. If the price of the stock was currently higher then you would get a smaller amount of shares, but if it were lower you would get a greater amount of shares. Over time these prices should average out and continue to generate profit as the stock market marches on to new highs over the years.

Most brokerages offer options to directly invest the dividends back into the stocks, so that you don't even need to log into your brokerage account. Moreover, with this method you do not even need to invest a certain amount of money at certain intervals, it is so simple. After it is set up there is almost nothing that needs to be done to possess an efficient wealth generating machine.