Simple question: dollar cost averaging

[Magikist]

I'm a relatively inexperienced investor, read a little bit about the dollar cost averaging method, but one big practical question: for every "purchase" you make, you have to pay a broker fee, right? So wouldn't it make sense to make fewer purchases so commissions don't eat into your principal? For instance, if I wanted to invest $100 a month, I'd have to make 12 separate trades at $30 a pop at Charles Schwabb. Obviously, throwing away 30% on your broker isn't good investing. So how do the experts do it?

Thanks in advance!

[Senor Choppy]

Experts don't make $30 trades. If it isn't completely obvious that your returns are going to be annihilated by making so many small trades, you probably shouldn't be picking stocks to begin with.

The additional time your money is invested won't make up for the added fees you'll be paying. You're better off waiting (putting the $ in a money market account) and buying stock every 6 months or so, or going with a DRP. You can find some info here: http://www.fool.com/school/Drips.htm

[BadBoyBenny]

Senor Choppy is exactly right that most investors would use a DRIP to dollar cost average with a single stock. Regular IRA or 401k contributions can have a similar effect with a mutual fund. Usually you are not paying commisions each time you contirbute to this type of plan.

Dollar Cost Averaging may be overrated as an investment strategy though.

check out the following infomation before deciding it is the right way for you.

http://www.moneychimp.com/features/dollar_cost.htm

[Ray Zee]

dollar cost averaging is a fallacy brouht on by people who dont understand simple math. it doesnt work for its intended goal. you should invest whenever you have money to invest. and always invest in low cost funds but preferably in individual stocks. after time you will have your own mutual fund low cost.

[playerfl]

right on the money. there is so much BS in the investment world it boggles the mind.

[Magikist]

Thank you to all who responded, I really appreciate the input. Once again this forum has proven to be an excellent resource.