By saving a monthly amount into an investment portfolio, you can whether out the highs and lows in asset prices, a concept known as
dollar cost averaging.
Dollar cost averaging is an effective tool to invest over long periods of time and take advantage of volatile markets.
And, an actual benefit of a downturn is the ability to buy stocks on the cheap if you are
dollar cost averaging into the market.
Market pullbacks and periods of increased volatility are not uncommon, and when they occur, opportunity can be the result: Ability to put new money to work in quality investments at more attractive historical valuations; For long-term investors reinvesting dividends, the opportunity to purchase additional shares at a lower share price; Ability to take advantage of buying opportunities particularly in oversold sectors of the market; and
Dollar cost averaging can result in purchasing shares at lower average prices over the long-term, as opposed to purchasing additional shares in a rising price environment.
If you haven't started investing towards a long-term goal because you're worried about short-term market volatility, consider using a popular investment strategy called
dollar cost averaging.
Dollar cost averaging takes some of the guesswork out of investing in the stock market.
Regular monthly savers will benefit from '
Dollar Cost Averaging' which describes the process of investing at lower prices every month to get a lower long term average buy price.
In fact, Vote Leave may even be beneficial because they will get cheaper units in the ensuing months, this creates
dollar cost averaging. Vote Remain Although staying within the EU will surely increase confidence among expatriate investors, there will likely be some trade and trust issues within Europe, according to GWM.
If you are putting money regularly in the market and you are using the formula of
dollar cost averaging that's the best way to access this market," Trivedi said.
Instead of market timing, for example, he endorses
dollar cost averaging. He explains why, rather than work with stockbrokers, investors should rely on investment advisors.
Moreover, such '
dollar cost averaging' allows people to invest at all levels of the markets, forces them to contribute to a mutual fund on an ongoing basis and reduces the risks of both timing the markets and of investing lump sums.
The power of compounding and
dollar cost averaging your investment contributions has a massive effect over the long haul.