Dollar Cost Averaging: Put Your Money on Autopilot

Dollar cost averaging is a simple yet effective strategy that will help you grow real wealth. The best part is, you can put your money on autopilot.  Dollar cost averaging takes the fear out of investing. Do you have a lump sum of money that you want to invest, but you’re waiting until the exact right time to invest it? You don’t just want to dump a pile, especially a big pile of money into the market at the wrong time and watch it evaporate. There are two ways you can avoid that happening; one is the wrong way, and one is the right way. All investors have two major concerns when they invest, making money and limiting risk. We all want big profits fast with no risk. But that’s not the reality of investing. To make money while limiting risk, we have to employ a good investing strategy. Dollar cost averaging is just such a strategy; it’s good for all investors but especially for those new to investing. Some Good Days and Some Bad Days On September 29, 2008, the Dow Jones Industrial Average suffered one of the worst losses in Wall Street history. Upon the news that the House had rejected the $700 billion bank bailout plan, the Dow plunged 778 points. In an instant, $1.2 trillion dollars in market value evaporated. If you had been a wary investor but finally decided to take the plunge on that day, you would have had a very bad day indeed. Just two weeks later, Wall Street saw its biggest one-day gain in history. The Dow added 936 points, and a record $1.2 trillion dollars surged back into the market. If you had invested that morning, you would have had a very good day indeed. Timing the Market If you had known to pull your money out before that big crash and known to put it back in the day of the big gain, you would have timed the market perfectly. But how would you know the crash and the rebound were coming? Some people think they can predict such things by timing the market. Market timing means trying to predict the direction of the financial market by analyzing the stock market and economic data. It’