Tis the Season for Investing
Nov 1, 2024
When markets decline or become volatile, it’s easy for emotions to take over. People often make impulsive decisions that can harm their financial health, such as selling in a down market and not reinvesting.
Imagine if groceries were marked down 20% at your local supermarket—people would be lining up to buy them. Yet, many don’t feel the same way about falling stock prices. Purchasing stocks and other securities during a down market can be like buying them on sale.
One effective way to navigate turbulent times is through a strategy called dollar-cost averaging. This simple approach helps investors stay on track with their long-term goals. It’s particularly useful during down markets, as it counters the emotional resistance to investing when prices are low and allows investors to potentially buy shares at a discount.
Dollar-cost averaging is a strategy where you invest equal amounts of money at regular intervals—say $250 a month—regardless of market conditions. Over time, this helps you buy more shares when prices are low and fewer shares when prices are high.
Here are three main reasons to consider dollar-cost averaging, especially during times of market uncertainty:
Good news: If you participate in your employer’s retirement plan, you’re likely already using dollar-cost averaging through regular paycheck contributions.
Dollar-cost averaging isn’t about deciding what to invest in, but rather when to invest. Incorporating it into a comprehensive financial plan with a diversified mix of stocks and bonds can help you stay on track toward your long-term financial goals, regardless of market fluctuations.
Questions? Contact an IMA Retirement Advisor today at (800) 305-1864 or retirement@imacorp.com and schedule an appointment!