What, When, How? These are the three questions that every advisor and every investor will have to consider at any given time. Of the three, the most difficult is “When?”
In other words, do we buy at today’s prices? Do we wait a month? Do we buy when the stock market reaches a certain level? Statistically, timing the market has never been a strategy that has proven to be repeatable. Additionally, what may seem to be a mistake today (e.g. buying now and seeing the price decline the next day) may have no bearing on the long-term results.
How can investors buy quality investments in times like these, without having to guess the market direction and without exceeding one’s comfort level? The answer is an approach known as “Dollar Cost Averaging.” Instead of purchasing an investment in one single lump sum, we can set up an investment program so that you invest a little at a time.
Think of it like buying an 8-slice pizza pie. But instead of buying the pie today, you buy 1 slice each month. After 8 months, you will have purchased the entire pie. “Dollar Cost Averaging” takes care of the WHEN and HOW questions. It also gives you peace of mind and enough time to adjust should anything go sideways.
As our team continues to monitor global economies and work with you to figure out WHAT to build into your portfolio to keep you on track to your goals, the real question is “do you feel comfortable eating the whole pizza now, or would you like to buy in slices?”
With unemployment skyrocketing in the past months across the globe, what do you expect with the markets moving forward?
Our Team’s Response:
We expect employment will begin to slowly rebound once the economy begins to re-open. Certain sectors such as airlines or sports will lag because of slow or phased re-openings. We also expect to see more grim fundamental economic data moving forward and that things should begin to turn the corner in August, moving towards the 4th quarter of the year.
As we prepare for early stages of a potential new equity cycle and/or the second wave of Covid-19, we encourage you to review your short/long term goals with us, manage market behaviour, and take out emotional decisions. And because the market can go either way in the upcoming months, you should adopt a dollar-cost average approach to take advantage of market fluctuations.
Give us a call. At Elementus Wealth our expertise is advising entrepreneurs to achieve a bigger impact.
We look forward to chatting.