Financial Information
Is it a good idea to continue to make automatic payments to my investment funds during this down market?
Question : Is it a good idea to continue to make automatic payments to my investment funds during this down market?
I’m 26 years old and for the last few years have been putting money into my investments automatically. Is it a good idea to keep doing it during a down market like now? I put about $ 1000 dollars in last month and lost about $ 600 of it!! I just hate the idea of automatically putting money into something that is losing right now. A little advice from someone would be appreciated. Thanks.
investment funds
Best answer:
Answer by Stephanie C
I can’t answer to your specific situation, but in general, YES. What you’re doing by making regular payments like this is called “dollar cost averaging.” And you get the advantage in DCA when the market takes a temporary down-turn.
In basic terms, if you buy stocks right now, when they are worth less, you are buying them ON SALE. Following the age-old adage of “buy low, sell high” – if the market is down right now, then it’s the “buy low” time.
If you’ve lost 60% of what you put into the market last month, I think you need to reevaluate WHAT you’re investing in. It’s not the market itself that is losing you money. What you’re invested in is going down a heck of a lot faster than the market. Most of the major indexes are only off their highs by 6-7%.