Experts recommend this investing strategy when the market is volatile. (via CNBCMakeIt)
Dollar-cost averaging is a strategy in which people invest the same amount of money at regular intervals. It ensures that investors aren't only selling high and buying low, as emotion might dictate.individual retirement account each month, you're already following this strategy and benefiting from it. "If you're enrolled in a 401(k) plan at work, don't stop contributing," Janet Alvarez, personal finance expert at Wise Bread and CNBC contributor, tells CNBC Make It . "It's essential to buy stock on the way down, just as you do on the way up." It's especially useful during a market downturn, because while an investor's reaction might be to stop investing until the market starts climbing again so you don't lose money, the better strategy is to buy at the lower price. But it's essentially impossible to time the market effectively over the long term, so dollar-cost averaging evens out the bumps so that investors come out ahead. "I try to tell my clients to fund their Roth IRA accounts each month to take advantage of this time-tested strategy," Ryan J. Marshall, a New Jersey-based certified financial planner, tells . "Dollar cost averaging helps avoid 'market timing' at the wrong times." This investing strategy also helps take emotion out of the equation, Marshall adds. "More specifically, it helps clients not see as sharp of a decline on their statements during periods of pullbacks because they are adding money each month," he says. "Most clients look at the bottom line on what the value was last month versus what is the value this month." If you're already investing are regular intervals, then your best course of action is to , no matter what the market does. Let dollar-cost averaging do the rest. Don't miss: Read more: CNBC
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