Navigating Market Volatility Series December 2025

Markets continue to experience periods of uncertainty, with fluctuations that can test investor confidence and raise questions about when to invest. This environment provides a timely opportunity to revisit another key principle for navigating market ups and downs: the importance of maintaining discipline through volatility, staying focused on long-term objectives, and continuing to put capital to work in a considered and consistent way.  

Concept #8: Dollar-cost averaging — investing through volatility

For many investors, investing is an ongoing process rather than a one-off decision. Regular contributions to superannuation or monthly investment plans mean money is invested consistently over time, regardless of short-term market movements — an approach known as dollar-cost averaging. While market volatility can feel uncomfortable, it can work in favour of investors who are still accumulating assets. When markets fall, regular contributions buy more units at lower prices, and when markets rise, fewer units are purchased at higher prices. Over time, this can result in a lower average purchase price and a greater number of units once markets recover.

Dollar-cost averaging also delivers a powerful behavioural benefit. By spreading investment decisions over time, it reduces the pressure to “get the timing right” and lowers the regret associated with investing just before a market downturn. Rather than trying to predict short-term market movements, investors can focus on consistency and discipline. In this way, regular investing helps turn market volatility from a source of anxiety into a long-term advantage.

The table below illustrates this concept by comparing two investors who each invest $6,000 over six months using different approaches. Investor A invests $1,000 each month as prices fluctuate, while Investor B invests the full amount upfront. As shown, Investor A accumulates 628 units (average unit price of $9.55) compared with Investor B’s 600 units (average unit price of $10.00), despite both investing the same total amount. This example highlights how dollar-cost averaging can help smooth the impact of market volatility, reduce the risk of poor timing, and potentially enhance long-term outcomes.