What are recurring purchases and dollar-cost averaging?

Dollar-cost averaging is a strategy that can be used to invest in assets such as cryptocurrencies. It involves investing a fixed amount of money at regular intervals, regardless of the current price of the asset. This can help to average out the cost of the asset over time, rather than investing a large amount at one price point.

For example, imagine two investors, Investor A and Investor B, both want to invest $2,400 in a cryptocurrency that is currently valued at $10 per unit. Investor A buys $2,400 worth of the cryptocurrency all at once, getting 240 units. Investor B, on the other hand, decides to divide the $2,400 into 12 monthly investments of $200. Over the course of 12 months, the price of the cryptocurrency fluctuates, so some months Investor B pays more than $10 per unit, and other months he pays less.

At the end of the 12 months, Investor A's investment of $2,400 will have a value of $2,640. However, Investor B's investment of $2,400 will be valued at $2,772, because he was able to buy the cryptocurrency at an average price of $9.5 per unit.

Pros:

• Averaging out the cost: By investing a fixed amount of money at regular intervals, regardless of the current price, dollar-cost averaging allows you to average out the cost of the asset over time.
• Reducing the impact of market volatility: By investing at regular intervals, dollar-cost averaging can help reduce the impact of market volatility on your investment.
• Simplicity: Dollar-cost averaging is a simple strategy that doesn't require constant monitoring of the market.

Cons:

• Limited control: With dollar-cost averaging, you don't have as much control over the timing of your investments, which can be a disadvantage if the market conditions change dramatically.
• Limited diversification: Dollar-cost averaging usually involves investing in one asset at a time, which can limit diversification. 
• Please note that the above list is not comprehensive, and it's important to do your own research before making any investment decisions.