What is an example of a cautious investment strategy?

Regularly investing to lower average costs is an example of a cautious investment strategy because it embodies the principle of dollar-cost averaging. This strategy involves consistently investing a fixed amount of money at regular intervals, regardless of market conditions. By doing so, an investor purchases more shares when prices are low and fewer shares when prices are high. This approach helps to mitigate the risk of volatility and reduces the impact of short-term market fluctuations on the overall investment.

Moreover, this strategy emphasizes a long-term perspective, which aligns with cautious investing principles that prioritize stability and capital preservation over immediate, high-risk gains. It enables investors to remain disciplined and focused on their financial goals without being swayed by market sentiment or trying to time market movements, which can be unpredictable and risky. In contrast, approaches such as investing aggressively in startups or timing the market may involve higher risks and potential for significant loss.