Cost Averaging - It Makes Sense (Dollars & Cents)

It's no secret that the market goes UP...the market, goes DOWN. That's the basics of Investing 101.

For many of us the shape of the market day to day has about as much influence on our lives as the time of the tides that day. But for investors - especially first time investors - it can be a rollercoaster of heart racing highs and stomach churning lows. Every movement is being carefully reviewed and if it turns down then investors with itchy feet jump out.

If you know the benefits of investing, how can you avoid the stress of putting your hard earned money into the market?

Financial planners and investors are quite clear on the subject. New investors should not make an investment unless they are going to let it sit at least 5 to 7 years - the longer the better.

Why?

Well, the economy DOES move up and down, but we have never seen it bottom out (and if it did - well, you'd have much bigger concerns than your investment).

By selecting a diversified portfolio, such as a mutual fund, you can usually base your prediction on past activity and you'll see that in any 7-15 year period the investor always came out with more than he put in.

How do you take advantage of that? When should you invest?

Well, if shares were being sold for $10 each and you had invested $100 you would have purchased 10 shares. Now, if that is your whole investment you would be very upset if the value went down to $5, wouldn't you? Now your stock is worth $50. What would you do? Sell before it goes lower and loose $50?

Using the 'Cost Averaging' technique:

Cost averaging means you continue to put the same amount of investment into the market regularly - preferably every month. Now if you did that you would have invested another $100. At $5 a share you would buy 20 shares. Right now you have invested $200 but only own $150 worth of shares.

What happens when the price goes up?

When the price goes back up (and it will) it may stop at $8 per share. Now what? Well, you invest your next $100 and buy 12 shares.

You now have 42 shares valued at $8 each. That totals $336. Your investment was $300 so you just made 12% off of your investment.

Combining the cost of averaging with the 10% recommended for us to set aside for savings or investment - what's stopping you from jumping in?

Lucy Vestirian is the webmaster for http://www.fyinvest.com which is the premier invest site on the Web. Visit http://www.fyinvest.com to learn about different investment ideas and strategies

---

Don?t Work for Your Money, Make it Work for You!

Well, the New Year is around the corner and so... Read More

Tax Strategy - Theres More to Building Wealth than Clipping Coupons

We talked recently about the wealth formula:Spend less than you... Read More

New Year Resolutions to a Better Financial Future

There could not be a better time to mull over... Read More

Money Myths Of The Poor

From tender age, we were exposed to myths about money... Read More

Anthony Robbins 12 Reasons Why People Dont Get Wealthy

According to Wallace Wattles, in his popular wealth treatise called... Read More

Simple Strategies to Making Financial Gain

Now is a great time to make it a habit... Read More

10 Ways To Find The Money Hiding In Your Paycheck

No matter how tight things are financially for you; no... Read More

How Much Do You Need To Earn Per Hour To Achieve Your Yearly Financial Goals

Have you ever asked yourself what your highest income producing... Read More

3 Simple Ways to Generate Cash Flow

This article focuses on generating cash as a full time... Read More

Lesson 2 - The Commodity Of Kings!

What is "The Commodity of Kings""Power is simply "the ability... Read More

Wealth Creation and Mortgage Planning - Two Great Tastes that Taste Great Together

What if I were to tell you that almost everything... Read More

Financial Planning for Beginners

Financial planning at an early age may seem complicated, however... Read More

The Mathematical Formula For Making Money

No matter what markets you serve; what products you sell;... Read More

Its High Time for Lifetime Savings Accounts

I'm constantly reading articles on the internet and in financial... Read More

How to Grow Your Very Own Money Tree

Okay. So money doesn't really grow on trees. Unless you... Read More

Who Will Become Wealthy in the Information Age?

As you know, we're now well and truly in theInformation... Read More

The Hawk and the Mouse - Saving for Retirement

There once was a hawk, ferocious and swift. He was... Read More

Increasing Your Wealth by Increasing Your Financial Literacy

Perhaps the primary message of Rich Dad, Poor Dad is... Read More

The Predicament of the Newly Rich

They are the object of thinly disguised envy. They are... Read More

Methods Of Raising Instant Cash

The inability to come up with the necessary cash when... Read More

Is Accumulating a $1,000,000 Net Worth Easy? Yes and NO

Is accumulating wealth as easy as following a 3-step plan?... Read More

One Pipeline Is Worth A Thousand Paychecks

It is with great pleasure of having you here at... Read More

Uncle Sams Snake Oild

Uncle Sam and his band of merry-men, better known as... Read More

The Morphing of Thought and Cash

Here are some thoughts about the morphing of thought and... Read More

Investors - What Separates the Good Traders from the Bad Traders?

There are many forms of investing online. While I can... Read More

Simple Tips on Saving

Simple tips on saving can very often make quite a... Read More

Residual Income - Part Three Finding Leaders

In my last article on Creating Residual Income I mentioned... Read More

Creating Money, Prosperity, and Abundance Now (Part 2)

Giving and ReceivingIt seems that people generally find it easy... Read More

Residual Income - The Myth

"Join our program and retire in 3 months..." yeah, right.We... Read More

Gain More Control of Your 401k - What It Can Mean to Your Future

Points to ponder as you consider what can be done... Read More

Wealth Creation - Opportunity

When young men ask me how to succeed, I tell... Read More

How to Save Money for Retirement

Saving money for retirement can be easy or difficult depending... Read More

Offshore Strategies & Services

Offshore strategies may or may not be right for you.... Read More