Why do investment advisors promote dollar cost averaging when the costs of those trades will wipe out any benefit?

Accounting Dec 08, 2020

Expert Solution

Investment advisors promote dollar-cost averaging because of many reasons.

It separates the emotional component from decision making. The investor can invest in a certain asset irrespective of the fluctuation of the price level.
It reduces the risk of a large amount of loss. It is beneficial to invest in a small amount as investing large amounts increases the risk. It eliminates the bad timing of investment.

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