There's nothing quite like a market selloff to test an investor's nerves. One minute your portfolio is riding high — the next, red screens and panic headlines are everywhere.
But if there's one strategy that can help cut through the noise and bring back a sense of control, it is dollar cost averaging.
Instead of trying to time the bottom — something even the pros rarely get right — dollar cost averaging is all about investing a set amount at regular intervals, regardless of where the market is. It smooths out the ups and downs and takes emotion out of the equation.
And right now, with high-quality names falling hard but still offering strong long-term potential, it's a strategy that makes more sense than ever.
The market is down. But the future isn't broken.
Take Pro Medicus Ltd (ASX: PME), for example. The health imaging software company is one of the ASX's true long-term winners, with massive global contracts, high margins, and a debt-free balance sheet.
Its share price, however, has pulled back significantly during the tech-heavy selloff. Has anything changed about its business? Not really. If anything, it continues to win new deals, expand internationally, and invest in growth.
Then there's the Betashares Nasdaq 100 ETF (ASX: NDQ). This ASX ETF tracks some of the most powerful companies in the world — Apple, Microsoft, Nvidia, Amazon, and more. And yet, after a sharp drop on Wall Street, the NDQ ETF is now trading well below its highs.
Trying to pick the perfect time to buy either stock could lead to stress, second-guessing, or sitting on the sidelines entirely. But by investing gradually — say once a month or once a quarter — you're always participating, without having to nail the timing.
The power of consistency
Dollar cost averaging works best when paired with quality businesses and long-term thinking. It won't guarantee a bottom, but it ensures that you're not stuck waiting for the perfect entry point — which, let's face it, you can blink and miss.
It also reduces the emotional strain. You're not checking the market every day, panicking about the next move. You're investing with discipline, building your exposure over time, and trusting in the compounding power of strong companies.
Foolish takeaway
Volatility is part of investing — but stress doesn't have to be. By using dollar cost averaging, you give yourself a framework that can thrive through uncertainty and position you to benefit when the rebound eventually comes.
And with names like Pro Medicus and the NDQ ETF trading at discounts, now might be one of the best times to lean into a strategy that rewards patience and consistency — instead of panic and perfection.
