What Is Dollar-Cost Averaging (and Why It's Perfect for Women Who Are Scared to Invest)

Janine Rogan
2 days ago
7 min read

Can I ask you something honest?

How long have you been telling yourself you'll start investing... eventually? Maybe you're waiting until you have more money. Or until the market calms down. Or until you fully understand what you're doing. Or until some unnamed future version of yourself feels ready.

Here's the thing: every month you wait, the gap between where you are and where you could be gets wider. Not by a little. By a lot.

But here's the other thing: there's a strategy that removes almost every reason women give for waiting. It doesn't require perfect timing. It doesn't require a large lump sum. It doesn't require you to understand the market. And it works especially well precisely because the market is unpredictable.

It's called dollar-cost averaging. And it might be the most powerful thing you can do with even $50 a month.

The Cost of Waiting (Before we Talk Strategy)

Let's get the math out of the way first. Because "start investing now" can feel abstract until you see what it actually means in dollars.

Two women both invest $300 per month. Both earn an average market return of 7% annually.

Woman A starts at age 25. By age 55, she has approximately $340,000. Woman B waits until age 35 to start. By age 55, she has approximately $148,000.
Same monthly amount. Same market. Same 20-year investing horizon for Woman B.
But Woman A has roughly $192,000 more.

That's not a small difference. That's years of financial security. That's the entire gap created by a single 10-year delay.

And when I say "waiting," I don't mean doing nothing. I mean waiting for the right moment. For the market to settle. For a better time.

There is no better time. The best time was ten years ago. The second-best time is right now.

So, What is Dollar-Cost Averaging?

Dollar-cost averaging (DCA) is the practice of investing a fixed amount of money at regular intervals (weekly, biweekly, or monthly) regardless of what the market is doing at that moment.

Instead of trying to find the "right" moment to invest a large lump sum, you invest consistently over time. Sometimes you'll buy when prices are high. Sometimes you'll buy when they're low. Averaged out, you'll buy at the middle, and that middle, over time, trends upward.

Here's why this matters: the strategy removes timing entirely from the equation. You're not trying to predict the market. You're not reacting to headlines. You're not frozen by analysis paralysis. You're just... investing. Automatically. On a schedule.

How Dollar-Cost Averaging Works

Let's say you invest $300 per month into an ETF. Here's what that might look like over four months when markets are volatile:

Month 1: ETF price is $50. You buy 6 units.
Month 2: ETF price drops to $40. You buy 7.5 units.
Month 3: ETF price drops to $30. You buy 10 units.
Month 4: ETF price recovers to $50. You buy 6 units.
Total invested: $1,200.
Total units purchased: 29.5 units.
Average price paid per unit: approximately $40.68.
Current value of those units at Month 4 price: $1,475.

Notice what happened in Months 2 and 3, when the market dropped? You didn't panic. You didn't sell. You didn't stop. You kept investing, and because the price was lower, you actually bought more units for the same $300. That's the beauty of DCA. Market volatility stops being something to fear and becomes something that works in your favour.

Why This Works Especially Well for Women

Financial research consistently shows that women tend to be more risk-averse investors than men, and that this can lead to delaying investment decisions or sitting in cash longer than is financially optimal.

But here's what the same research shows: women who do invest tend to outperform male investors over the long term. We're less likely to panic-sell. Less likely to chase high-risk speculation. More likely to stick with a strategy.

Dollar-cost averaging plays directly to those strengths.

It removes the pressure of timing the market; the anxiety-inducing question of "is now a good time?" disappears entirely when your investment is scheduled automatically. It makes market dips feel less like losses and more like buying opportunities, because with DCA, when prices fall, your fixed contribution buys more. It builds the investing habit gradually, which research shows is one of the most important predictors of long-term wealth accumulation.

How to Set Up Dollar-Cost Averaging in Canada

Step 1: Open a self-directed registered account.

If you don't already have one, open a TFSA or RRSP with a self-directed platform like Wealthsimple or Questrade. Both are free to open and have no minimum balance requirements.

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Step 2: Choose a diversified investment.

For beginners, an all-in-one asset allocation ETF is a practical starting point. These funds hold a globally diversified mix of stocks and bonds in a single purchase and automatically rebalance.

Step 3: Set a fixed amount you can invest each month without straining your budget.

It doesn't have to be large. Even $50 to $100 per month, invested consistently, compounds significantly over 20 to 30 years. Start where you are, not where you think you should be.

Step 4: Automate.

Set up a recurring purchase through your investment platform so the money moves and invests automatically on the same date each month, ideally tied to your paycheque schedule.

Step 5: Do not look at it constantly.

The emotional volatility of checking your portfolio daily is one of the most common reasons people abandon good investment strategies. Set it, automate it, and check in quarterly or annually.

What $300/month Actually Becomes Over Time

Here's what $300 per month, invested consistently, looks like at an assumed average annual return of 7%*:

After 10 years: approximately $52,000
After 20 years: approximately $148,000
After 25 years: approximately $227,000
After 30 years: approximately $340,000

The total cash you invested over 30 years: $108,000. The amount your investments grew above that: approximately $232,000.

That's what compound growth looks like. And dollar-cost averaging is how ordinary Canadians access it, not by being rich, not by having perfect timing, but by being consistent.

*the average rate of return is 10% for the stock market

FREQUENTLY ASKED QUESTIONS ABOUT DOLLAR COST AVERAGING

What is dollar-cost averaging?

Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals, $300 per month, regardless of what the market is doing. Rather than trying to time the market by investing a lump sum at the "right" moment, DCA spreads purchases over time so you buy at various price points. The result is that you buy more units when prices are low and fewer when prices are high, averaging down your overall cost per unit over time.

Is dollar-cost averaging a good strategy for beginners?

Dollar-cost averaging is widely recommended as one of the most effective strategies for beginner investors because it removes the need to time the market, reduces the emotional stress of investing during volatility, and builds consistent investing habits. Research supports that consistent, automated investing through DCA outperforms cash-sitting and intermittent lump-sum investing for most retail investors.

Does dollar-cost averaging work in a down market?

Yes. In fact, a down market is where dollar-cost averaging is most powerful. When prices fall, your fixed monthly contribution buys more units at a lower price. When the market recovers, you benefit from having accumulated those units at a discount. The key is to stay consistent through the dip rather than pausing or stopping contributions.

Can I do dollar-cost averaging with just $50 or $100 a month?

Yes. Many Canadian investment platforms like Wealthsimple Trade allow you to buy fractional shares and have no minimum investment. Starting with $50 or $100 per month is meaningful; compound interest works on any amount, and building the habit is often more valuable than the starting sum.

Should I invest a lump sum or dollar-cost average?

Academic research shows that lump-sum investing outperforms DCA about two-thirds of the time in historical markets, because markets tend to trend upward and money invested sooner benefits from more time in the market. But for most people, the psychological benefit of DCA, reducing anxiety and enabling consistent action, outweighs the theoretical advantage of perfect lump-sum timing. If a lump sum would sit in cash because you're too anxious to invest it all at once, DCA is the right strategy for you.

How do I automate dollar-cost averaging in Canada?

Most self-directed investment platforms in Canada, including Wealthsimple and Questrade, allow you to set up recurring deposits and automatic purchases that trigger on a schedule you set. Once established, contributions move and invest automatically without you needing to take action each month.

Ready to Start?

Dollar-cost averaging is the strategy. The next step is to track your progress so you can see how your consistent contributions are building over time.

And if you want to build a comprehensive strategy, not just how to invest, but also what to invest in, how to utilize your registered accounts, and how to think about your financial future holistically, then you need The Wealth Lab. Learn more about The Wealth Lab here >>