Lesson 6 of 6 · 8 min
Time in the market and compounding
Consistency and patience do the heavy lifting.
Dollar-cost averaging means investing a fixed amount on a schedule regardless of price. You buy more shares when prices are low and fewer when they're high.
Reinvested dividends and growth compound: returns begin earning returns of their own.
The broad U.S. market has historically risen over long periods, but with deep declines along the way. Past performance does not guarantee future results.
Diagram
Trade example · VTI (Total Market ETF)
Dollar-cost averaging through a dip
An investor invests $200 on the first of each month for four months.
- Month 1 at $250
- 0.80 shares
- Month 2 at $225
- 0.89 shares
- Month 3 at $200
- 1.00 share
- Month 4 at $240
- 0.83 shares
- Total
- $800 → 3.52 shares, avg cost $227.27
At $240, the position is worth ≈ $845 even though the price is still below where they started.
A schedule removes emotion and turns dips into opportunities to buy more shares.
Prices are rounded examples for teaching, not live quotes or recommendations to buy or sell.
Key takeaways
- Invest consistently on a schedule.
- Reinvest to let returns compound.
- Expect volatility; think in years, not days.
Knowledge check
With dollar-cost averaging, what happens when prices fall?
DisclaimerMoor Capital provides financial education and informational tools. Content is not individualized investment, legal, tax, credit-repair, or financial advice. Investing involves risk, including possible loss of principal.