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Don't Wait

Since the beginning of stock trading, investors have looked for signs to indicate when stock prices will rise or fall. So far, no one has come up with a foolproof method for predicting market swings.

Timing is tricky

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Some investors use a market timing strategy by buying shares when they think stock prices are at their lowest and selling their investments when they believe the market has reached its peak. Although they may be successful some of the time, few investors can repeatedly time their buy-sell decisions to correspond with market movements. If you sell your investments when values start dropping and don’t get back in the market soon enough when prices start to rise again, you could miss out on significant gains.

Same time, same amount

Instead of trying to guess what the securities markets are going to do, you may want to consider using an investment strategy known as dollar-cost averaging.* With dollar-cost averaging, you invest a fixed amount of money in the same investment or investment type at regular intervals. Your money buys more shares when prices are low and fewer shares when prices are high. There are no guarantees. Your average cost per share may be less than the average share price for the same period with this method.

Dollar-cost averaging won’t completely protect your portfolio from a loss if the market takes a plunge. But it may help reduce any losses and leave you in a good position to benefit from a recovery, since you’ll still be fully invested.

Notices & Disclosures

Article is adapted from content provided by DST.

* Investing regular amounts steadily over time (dollar-cost averaging) may lower your average per-share cost, but this investment method will not guarantee a profit or protect you from a loss in declining markets. Effectiveness requires continuous investment, regardless of fluctuating prices. You should consider your ability to continue buying through periods of low prices.

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