Fortune has smiled upon you: You just got a bonus at work. Now you’re wondering about the best way to invest it (A+ decision, by the way) in order to help it grow over time. Here’s Sallie’s advice.
Sallie’s answer:
Love the question because it asks, “Should I invest it?” So you’re not out fully spending it. Fantastic work, taking care of future you.
There’s no right answer to this. There’s one school of thought: Invest it a bit over time. The market bobbles. You’ll get in high at some points in the market, low at some points in the market. It’ll average out over time, called dollar-cost averaging.
The other point of view is the stock market, historically, has trended up over time. So go ahead and get that money in there, and you might not catch the exact low at this point, but go ahead and get it in there. The only time it really matters is if you are unfortunate enough to invest right before a market crash, which happily only happens every once in a while.
So go ahead, whether you do it right away, or whether you’re investing it a bit over time. Love that you’re getting it into the markets. Go.
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The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.
The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.
Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.
The practice of investing a fixed dollar amount on a regular basis does not ensure a profit and does not protect against loss in declining markets. It involves continuous investing regardless of fluctuating price levels. Investors should consider their ability to continue investing through periods of fluctuating market conditions.