Cost Averaging... It Makes Sense (Dollars & Cents)
It's no secret that the market goes UP...the market, goes DOWN. That's the basics of Investing 101.
For many of us the shape of the market day to day has about as much influence on our lives as the time of the tides that day. But for investors - especially first time investors - it can Botox : New Age Treatment For Aging be a rollercoaster of heart racing highs and stomach churning lows. Every movement is being carefully reviewed and if it turns down then investors with itchy feet jump out.
Financial planners and investors are quite clear on the subject. New investors should not make an investment unless they are going to let it sit at least 5 to 7 years - the longer the better.
Well, the economy DOES Windows 7 Update Error 606 move up and down, but we have never seen it bottom out (and if it did - well, you'd have much bigger concerns than your investment).
By selecting a diversified portfolio, such as a mutual fund, you can usually base your prediction on past activity and you'll see that in Microsoft Crm Activex any 7-15 year period the investor always came out with more than he put in.
How do you take advantage of that? When should you invest?
Well, if shares were being sold for $10 each and you had invested $100 you would have purchased 10 shares. Now, if that is your whole investment you would be very Making the Email Subscription Process Easier upset if the value went down to $5, wouldn't you? Now your stock is worth $50. What would you do? Sell before it goes lower and loose $50?
Using the 'Cost Averaging' technique:
Cost averaging means you continue to put the same amount of investment into the market regularly - preferably every month. Now if you did that you would have invested another $100. At $5 a share you would buy 20 shares. Right now you have invested $200 but only own $150 worth of shares.