November 28, 2011

Scared of the stock market? Try dollar cost averaging!

The stock market is a scary place to invest your money these days, however there really isn't much of an alternative with fixed income paying almost nothing so what to do?

I suggest selling your stock mutual funds or etf's when you are feeling very uncomfortable or giddy with your investments and then jumping right back in via dollar cost averaging.

Dollar cost averaging is the process of buying on a regular basis or in increments so as to ideally get a good average price and dollar cost averaging works well with the volatility that we have been witnessing lately.

Sure you may miss out on some of a rally but you may miss out on some of the downturn too?!  This strategy is not for everyone and does entail some fees but bottom line is that it'll keep you in the stock market to some extent and keep some of your sanity as well.

Of course, if you have any questions, remember that I am a money coach and am happy to answer questions or concerns you may have.  Email me at scott@howtheinvestmentbusinessreallyworks.com.

2 comments:

  1. I have been DCA for years and it works very well. If I feel the market is overvalued, I go to cash and start the process all over again. Works for me!

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    1. Wonderful idea, I am not so much for market timing but that is about the best way to accomplish!

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