Oct 24
Tip for Smart Investing -- Dollar-Cost Averaging
Many folks come up with smart, diversified investment plans (here's a good place to start on that), but find they only put new money into those accounts when end-of-year bonuses, gifts, or windfall events occur.
Transfering a set amount every month to your investment accounts is a much smarter approach, for two reasons: (1) You'll automatically buy more when your investment market (whatever the asset class) is low, and buy less when it's high. This is called dollar-cost averaging; and (2) bonuses and windfalls (gasp) sometimes don't come. The end of the month is a far more reliable trigger.
But this takes real discipline. Consider setting up an automatic deposit plan from your paycheck to make it happen.
Comments
Good tip. I have written an article about a slightly improved version at emervest.blogspot.com