Strat­egy above av­er­age

Western Suburbs Weekly - - Business - Troy.MacMil­lan@twd.com.au Troy MacMil­lan

Q: I re­ally want to in­vest, but mar­kets seem so up and down at the mo­ment and as a re­sult, I am quite hes­i­tant to in­vest. Do you have any ad­vice on when is the best time to do this? An­ton - Dalkeith A: Not even the world's best econ­o­mists know when mar­kets are head­ing up or down, so choos­ing the best time to in­vest is no­to­ri­ously dif­fi­cult.

But if you re­ally want to in­vest, there is a way to safe­guard your­self from in­vest­ing your money at the worst pos­si­ble time: it's called dol­lar cost aver­ag­ing.

Dol­lar cost aver­ag­ing is a very sim­ple strat­egy with a lot of power. Ba­si­cally, all you have to do is in­vest a set amount of money at reg­u­lar in­ter­vals, for ex­am­ple $1000 at the start of each month.

This takes the stress out of try­ing to time the mar­ket by smooth­ing out your in­vest­ment over time.

So while one month you may buy $1000 worth of shares at $10 each, the next month it could be $9.50, and the next month $9.

This means you mit­i­gate the risk of buy­ing all your shares at an in­op­por­tune time.

With this strat­egy, you can quit wor­ry­ing about in­vest­ment prices day-to-day and chop­ping and chang­ing your plan based on in­vest­ment tips from neigh­bours and taxi driv­ers.

And the best part of it is that you'll buy more shares when prices are low and fewer when price are high.

Dol­lar cost aver­ag­ing cuts out the emo­tional ele­ment to in­vest­ing, re­plac­ing ir­ra­tional spur-ofthe-mo­ment de­ci­sions with a thought­ful longterm in­vest­ment plan that will see you build­ing wealth con­sis­tently over time.

With mar­ket volatil­ity high, now may be the per­fect time to use the strat­egy. on De­sign­ing Wealth

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