Dollar-cost averaging means you’ll buy more shares when prices are lower and fewer shares when prices peak. This lowers the average price of shares over time compared to lump-sum investing.

Dollar-cost averaging doesn’t usually mean higher returns. If maximizing earnings is the goal, investors can, on average, best serve it by immediately putting all their money in the stock or other security they want to buy. This is because, over time, markets generally trend upwards and, on average, the least expensive time to invest is today.

This may not always be true when it comes to stocks that exhibit greater volatility than the market. But, as a rule of thumb, dollar-cost averaging will lower returns while also dampening volatility.

Dollar-cost averaging an investment in NVDA can produce impressive returns. An analysis by a specialized dollar-cost averaging calculator indicates that investing $1,000 in the company’s shares every month starting April 3, 2023, would by March 21, 2025, have produced $228,996.88 in gains for a cost of $24,000. That’s a return of 954.15% over slightly less than two years.

NVDA stock today is up about 300% compared to two years ago. That means if you had put $24,000 into NVDA two years ago, you would have a relatively modest $72,000 now. In this historical example, you could supercharge your returns by dollar-cost averaging because the volatility in NVDA stock would have allowed you to buy shares for an average price of much less than they were trading for two years ago. Consider matching with a fiduciary financial advisor if you’re interested in discussing your investment strategy and execution.

In addition to dollar-cost averaging and all-at-once investing, you can try to time your investments by, for instance, watching for developments that may affect NVDA’s stock price. For example, if you anticipate an earnings release that will be more positive than everyone is expecting you could buy shares now. Or, if you expected earnings to disappoint, you could wait until after the release in the expectation that share prices will have dropped temporarily. This strategy relies on your having the ability to out-guess the market, however.

One effective way to invest is through a tax-deferred retirement account, such as a 401(k). This allows you to dollar-cost average because you put money into the account every payday. It also provides a tax benefit by allowing earnings to accumulate tax-free. And, due to restrictions on early withdrawals, you will likely be discouraged from taking profits instead of staying fully invested. Studies show staying fully invested at all times generally is the most effective way to build long-term wealth.

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Timing NVDA investments can increase returns and dampen volatility if you use the dollar-cost averaging method. This reduces the average cost of shares and is an especially effective method of investing when prices are subject to significant fluctuations, as is the case with NVDA. The company’s long-term future prospects are generally highly regarded, despite its stock price retreating from recent highs. So whether investing all at once with a buy-and-hold strategy or purchasing shares with dollar-cost averaging, NVDA remains one of the most popular and valuable companies to invest in.

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• When you sell a stock or other asset that has appreciated, you may owe taxes on your gain. Use SmartAsset’s Capital Gains Tax Calculator to find out how much you’ll have to pay when you dispose of an asset for more than you paid.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

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