7 Passive Income Ideas to Make Money & Build Wealth in 2024

4. Long-term Investments in Stocks

Investing in quality stocks is one of the best ways to generate wealth. Dollar cost averaging (DCA) is an example of investment strategies that will allow you to invest safely. The term was coined by value investing legend Benjamin Graham. DCA requires investing a fixed dollar amount regularly. In other terms, dollar cost averaging is like taking small, regular steps into the investment world instead of jumping in all at once. It helps reduce the risk of investing a large sum at a bad time, and it’s a way to steadily grow your investment over time.

To better understand DCA, imagine you have $1,000 to invest in the stock market. Instead of investing it all at once, you decide to spread out your investments over 10 months. For instance, you might invest $100 each month. Now, the price of stocks can go up and down. When prices are high, your $100 buys fewer shares. When prices are low, your $100 buys more shares. Over time, this strategy helps you smooth out the effects of market volatility.