Archive for August, 2012

Stay the Course

Investing common sense

 

Let’s face it, in times like these there are lots of reasons not to invest in the market. Stock markets have been very volatile over the past year and many believe this is now the normal market behavior and the trend will continue for some time yet. It’s no surprise many investors want out and would rather sit on the sidelines than face the roller coaster ride with their retirement or savings plans.

A look back at market history though should provide some comfort. Through each crash or crisis (and there have been several 1974/75, 1982, 1987, 1997, 2001, 2008, 2010) the long run trend has always still been up.

Sticking to a plan and staying invested is important, no matter how much our emotions get in the way. Of course one has to take in to consideration your age and stage, retirement or savings goals and if taking income is a priority at that time.  Most years do however provide a positive return. Since inception (roughly 1956) 29% of the time or 16 occurrences of negative returns happen versus 71% or 39 occurrences of positive returns. (Source Morningstar Direct, as of April 30 2012.)

Dollar cost averaging is one strategy you can employ to combat the nervous nellies  of investing. By investing equal amounts of money regularly over a specific time period, automatically   one can avoid the temptation to try to time the market (virtually impossible any how).  This kind of approach can ensure that investors stick to their plan and avoid lapses in self control when the markets fall ( which is actually the best time to buy, its all on sale!)

I hope this strategy can  instill more confidence about planning for the  future  and get  financial goals back on track  for those who should be building wealth  and are sitting on the sidelines.

 

Please come and see me at the Hastings County Plowing Match this August 22,23 if you have questions or concerns.  I will be once again with BridlePath Tack and have great draw prizes.