Should you be timing the market?

Investors often try to pick the best time to buy shares, then worry they bought too early or too late. But is it really the best strategy?

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If you’re trying to make money investing, then timing the market is one strategy you could try, but it’s not going to be easy… or even possible.

Most investors become nervous trying to pick the best time to buy and sell assets, because investments can go up and down in value over a short period of time.

Women in particular are known to be more worrisome and less willing to take risk than men when it comes to investing.

This begs the question of what strategies can we use to ease the mind?

One of the more popular investment strategies is dollar cost averaging.

Dollar cost averaging is a wealth building strategy that involves investing a fixed amount of money at regular intervals over a long period of time.

The basic principle of dollar cost averaging works like this:

Say you invest the same amount of money regularly, regardless of the market.

For example, you commit to invest $100 each month in shares of XZY company.

Then you simply buy $100 worth of shares each month.

It’s that simple.

When XYZ Co is doing well, the share price rises, so you can’t buy as many shares that month.

Similarly, when the share price falls, your $100 buys you more shares that month.

Either way, you’re building your asset base and that’s what you want to do when you’re investing.

You follow a plan of routine investing, regardless of what is happening in the stock market.

It fits perfectly with payroll deduction plans offered by employers, or periodic automatic transfers from your bank account.

Dollar cost averaging doesn’t guarantee success, but it takes the emotion out of investing and makes it a habit.

It also allows you to start investing now, rather than procrastinating until you learn more about the market.

As the saying goes:

Time in the market is more important than timing the market.

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