Dollar-cost averaging is a simple yet effective strategy that can help investors build wealth over time. It involves investing a fixed amount of money at regular intervals, regardless of market conditions. By doing so, investors buy more shares when prices are low and fewer shares when prices are high.

One of the main advantages of dollar-cost averaging is that it helps remove the emotion from investing. Many investors tend to buy when prices are high out of fear of missing out, and sell when prices are low out of panic. This behavior often leads to poor investment decisions. However, dollar-cost averaging encourages investors to stick to a disciplined investment strategy and avoid making hasty decisions based on short-term market fluctuations.

Furthermore, dollar-cost averaging mitigates the risk of investing a lump sum all at once. Timing the market and investing a large sum of money can be risky, as it is difficult to predict short-term market movements. By spreading investments over time, investors reduce the impact of market volatility and can potentially benefit from the long-term growth of the market.