Simply put, dollar cost averaging (DCA) is a stock purchasing plan that helps investors minimize the timing risk associated with lump sum investing. It is a strategy that is best used by investors with little time to watch the day to day fluctuation but still want to invest money in equities because it lets you set-and-forget your investment strategy, minimizing the time you need to spend study stocks and watching your portfolio. It certainly isn't a strategy loved by all, but it does have its benefits.

The way that this investing strategy works is to purchase stocks or mutual funds at a certain times during the year with a certain amount of cash. The traditional way to do it was to invest on the first day of each quarter of the year for an entire year. However, individual investor should not feel bogged down by this understanding of dollar cost averaging and should simply consider it an investment strategy that invests a certain amount of money at a fixed point in time.
You could dollar cost average $1000 by investing $20 on Tuesdays for 50 weeks. Or you could invest the same $1000 by investing $100 of the second Monday of every month. Whatever you decide to do it is still dollar cost averaging because you are investing your money at a predetermined interval and in predetermined amounts.

Another key characteristic of this type of investing is a fairly long investing horizon. Most experts recommend that you stick with this type of investment strategy for 7-10 years so that you can benefit from any cyclical down period in the economy as a whole. You will also benefit from the assumed upward trend of the market.

The main benefit of DCA is that is helps you avoid the dreaded "worst timing" scenario. This is the investment decision that we all fear when we start investing. It is that sudden dip in the market that turns our $5000 investment into $2500 in the course of single week. It could take years to recover from loses of this magnitude - and dollar cost averaging will help you minimize the impact that such a precipitous fall can have on your investment portfolio.

But DCA does have some negatives to it as well. The additional 'safety' that this strategy provides comes at a price - the ability to 'perfectly' time the market. This is that rare moment when you buy a stock at its lowest point and sell it at its highest. Though rare, a dollar cost averaging investment strategy completely obliterates your chances of perfectly timing the market.

It is also important to note that not every financial guru or academic thinks that dollar cost averaging is really that great of an investment strategy. They can question just how effective dollar cost averaging is at mitigating risks, so this strategy should definitely be carefully considered before implementing.

In the end, each individual investor is responsible for how they handle their own money. Dollar cost averaging is simply one tool in a very large tool shed. Getting educated about which investing tool is right for you is very important and will take some time and serious effort. Rest assured, this type of self education is worth every minute and every penny

In today's depressive stock market it is hard to find a silver lining. Green investing is a way to feel good about your stocks and mutual funds while having the potential to make a healthy return on investment. Socially responsible investing makes sense during the corruption on Wall Street and the search for alternative energy sources.
Green investing is finally coming into the mainstream. People can do what's right for the environment and build wealth too! Socially responsible investing has been around for decades and is now becoming popular. SRI already has $2.3 trillion in investments. SRI started by appealing to investors who wanted to avoid sin stocks, the stocks of companies that are involved in alcohol, tobacco, and gambling.
Today, Social Responsible Investing is an all encompassing term that generally means screening companies out that are abusive to the environment, practice poor labor relations, are not responsible to their communities and lack corporate integrity. SRI has evolved to serve in an advocacy manner. The new focus by consumers, business and government on sustainability and the environment has created its own category of SRI. Goldman Sachs, the darling of Wall Street, has already set aside $1.5 billion to privately invest in green companies. CalPERS; one of the country's largest institutional investors, has set aside more than a billion dollars for green investments.

How do you catch the green investing wave? The most practical and probably most efficient way to put money to work in a SRI is via an SRI mutual fund. Other ways to invest are via an Exchange Traded Fund and by owning stocks individually. The latter way takes more time, expertise and is riskier as you are not diversified as well as a mutual fund.

Not all SRI funds are alike. For decades SRI has screened out companies that were considered socially or ethically unacceptable. Now green funds screen in companies that are making a positive impact. Today's green funds include some surprising choices as more and more blue-chip companies are becoming green-chip companies.

How do they work? Imagine if you or I try and ask a CEO about changing her packaging for products or about ending abusive consumer practices. We would not get too far. But imagine a pot of $2 trillion dollars invested by SRI managers speaking about these things to CEO's? For better or worse, having that much money under management gives them an open ear to management. This shareholder advocacy becomes a powerful force for improvement.

SRI aligns your money with your interests. In my opinion, companies that focus on doing right by the consumer, the environment, the marketplace and all other constituents tend to do better over the long term. It is those who focus on the short term and take shortcuts that tend to be disappointing investments. Sustainability is not just about us as humans on this earth but is also relevant to companies and investments.

In the past, being altruistic and investing was not as correlated as they can be today. You can put money to work, funding newer renewable energy technologies and have your money working in an area that is the next challenge for our country while offering a potential favorable return on your money. A major Wall Street firm recently put out a research report titled "Clean Energy: Sustainable Opportunities." They predicted that annual clean-energy revenue opportunities could reach $500 billion by 2020 and a trillion annually by 2030. This is an exciting time indeed!