dollar cost averaging
Thank you for answering my first question. I was in an all bond portfolio, and out of the market for 4 months. Is it to late to dollar cost average back in? I have transferred my money to Vanguard. Thank you again.
Terry Says
Dollar-cost-averaging simply means sticking to a schedule of investing -- It could be a few hundred dollars a month, or if you have a lump sum it could mean putting 20% in now, and 20% at the start of the next quarter or 6 months from now. What's important is making a schedule and STICKING to it! You must do that despite market ups and downs. When the market falls your set amount will buy more shares in your mutual fund, so during the rebound you get a bigger bang for your buck. The one thing this does is make sure that you never put ALL your money in the market at the top because you are staggering your purchases. The secret is self discipline. And the issue is setting a reasonable schedule and amount for your planned investments -- based on your overall goals, risk tolerance and age. That part is up to you -- but should be done calmly, not in the midst of a market mania-- either up or down.
