Which investment strategy involves purchasing a consistent dollar amount of the same stock at regular intervals?

The investment strategy that involves purchasing a consistent dollar amount of the same stock at regular intervals is known as dollar cost averaging. This approach allows investors to buy more shares when prices are low and fewer shares when prices are high, effectively spreading the investment risk over time. By adhering to this method, investors can reduce the impact of market volatility and avoid the pitfalls of trying to time the market, which is often unpredictable.

For instance, if an investor decides to invest $100 in a particular stock every month, they will buy more shares during months when the stock price is lower and fewer shares when the price is higher. Over time, this can lead to a lower average cost per share compared to making a lump sum investment at a potentially high market price.

This strategy emphasizes the importance of consistency and discipline in investing, making it a popular choice among both novice and experienced investors. It is particularly beneficial in volatile markets, where stock prices can fluctuate significantly from one period to the next.