Making regular investments in a stock or stock mutual fund when the market is down as well as when it is on the rise is a strategy known as dollar cost averaging. With dollar cost averaging, you invest a fixed amount monthly or quarterly. When the market is down, your money buys more shares. Over the long-term, the average price you pay per share generally will be lower than the average price of the stock investment during the same period. Of course, since dollar cost averaging does not ensure a profit and does not protect against loss in declining markets, you need to first consider your financial ability to buy shares.
Wise investors don t try to second-guess the financial markets.
They take a structured, disciplined approach to investing that recognizes that market declines inevitably will occur. Cade D. Sibley, is a Registered Representative of Lincoln Financial Advisors Corporation and an Advisor Representative of Sagemark Consulting, Inc., a registered investment advisor.