Volatility is up, yes. The market is down, yes. However, this should not be a time to panic. The stock market has been all over the headlines for the historic drops that have taken place, leading to fear from investors of all ages. The market had become overextended from fall into late January, and the spread of coronavirus put a shock wave through the financial system. A big question is will there be a recession in 2020? No one knows the exact impact the virus will have on the global economy and it is hard to say what sort of ripple effects it will create. The one thing you can be certain of is, historically stocks go up over time. Do not let the recent volatility scare you out of your investment strategy of investing throughout your entire life. As events unfold with coronavirus, there will be large dips, and this is where commitment to your investment strategy comes into play.
Dollar-cost averaging is your most effective tool in creating true wealth. DCA is when you invest the same dollar amount at regular intervals (monthly, quarterly, annually). By putting the same amount of money into the market at regular intervals, you are buying more shares at lower prices and fewer shares at higher prices. Investors who use DCA pray to the Lords above for times like this, times when they can get more quality shares for less of a premium. That is why I say do not let this market volatility scare you away. Create an investment strategy and stick with it through thick and thin. Make no mistake about it, there will be bad times (as you’ve seen the last few weeks) but there will also be great times, times when you will give thanks that you purchased quality companies for such a low cost.
There will always come times when internal or external events unfold that give the stock market angst, and these times will provide good opportunities to acquire more high-quality shares for less. I will say it again, adopt an investment strategy, and stick with it.
Comments are closed