Consider Dollar-cost Averaging
The volatile stock market has many investors questioning their
investment strategy and others wondering whether they should be in the market at all.
Dollar-cost averaging is one investment strategy that makes sense both in a booming market
and when the market slows down.
Dollar-cost averaging requires consistency. This simple plan involves investing a set
amount of money on a regular basis, typically in a mutual fund. When the market is down,
your money will buy more shares. When the market is up, your money buys fewer shares.
Dollar-cost averaging encourages discipline. Because the amount you
invest remains constant, you can more easily budget for it. Consider setting up an
automatic withdrawal from your bank account to keep on track. If money is not in your
personal account to use, you'll tend to adjust your spending habits accordingly.
Dollar-cost averaging eliminates emotional decisions. "Buy low and sell high"
may be the perfect investment strategy. However, investors often do just the opposite.
They buy a stock or fund when it's moving higher and stop buying it when it begins to fall
in value. Dollar-cost averaging takes the emotional factor out of your purchase decisions.
Dollar-cost averaging is simply an investment strategy. You still need to review your
investments periodically to make sure that they continue to meet your expectations and
your risk tolerance.
Accumulating wealth requires a long-term plan. For assistance, call us.
Related pages:
Personal
Financial Planning
Review Your Mutual Funds
© Copyright 2001 Raymond S. Kulzick. All rights reserved. 010703.
This publication provides business, financial planning, and/or tax information to our clients. All material is for general information only and should not be acted upon without seeking appropriate professional assistance.