Are you worried about "jumping into" the market at the wrong time? Well you shouldn't be as long as you use a method called "dollar cost averaging".
Dollar cost averaging is an investment method in which you put the same amount of money into an investment at regular intervals, such as every month. As the price of the investment rises and declines, you end up purchasing more shares when prices are low and less shares when prices are high. Using this method, there is no need to worry about timing the market.
For example, suppose you've got $1200 that you want to invest in "XYZ Stock" but you're worried that the market will go down. You can "average" your risk out over a period of a year if you should invest $100 once a month for 12 months. With the fluctuating price of the investment, your history of monthly purchases may appear as follows:
| Date | Price | # of Shares Bought |
| Jan 1 | $10.00 | 10 Shares |
| Feb 1 | $12.25 | 8 Shares |
| Mar 1 | $11.76 | 8.5 Shares |
| Apr 1 | $11.11 | 9 Shares |
| May 1 | $10.00 | 10 Shares |
| Jun 1 | $9.09 | 11 Shares |
| Jul 1 | $7.14 | 14 Shares |
| Aug 1 | $8.33 | 12 Shares |
| Sep 1 | $8.00 | 12.5 Shares |
| Oct 1 | $9.00 | 11.11 Shares |
| Nov 1 | $11.63 | 8.6 Shares |
| Dec 1 | $15.52 | 6.44 Shares |
At the end of the year, you would own 121.15 shares that were purchased at varying prices. As you can see, more shares were purchased when the NAV (Net Asset Value) was low and less shares were purchased when the NAV was high, paying on average $9.90 per share. Using Dollar Cost Averaging, this example would have turned your $1200 into $1,880.24. If you had instead bought 120 shares at $10 per share on Jan 1, you would have made just a little bit less money; $1,862.40.
The point of Dollar Cost Averaging is that, over a range of months as the
value of a stock varies, you will get an average price of somewhere between
the maximum and minimum of that range, instead of hoping that you picked the
low point. With the power of compounding and time on their side, any Buck Investor would benefit from this method.
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