Is it better to add money to your investment account every month, or at certain times throughout the year?

I'm about to open my first index fund with Vanguard. Should I set up automatic payments into the account every month, or would my money be better spent if I kept my investment capital in a savings account until a drop in the market, then put it all in at times like that?

Also, I'm new to investing, so any

I'm about to open my first index fund with Vanguard. Should I set up automatic payments into the account every month, or would my money be better spent if I kept my investment capital in a savings account until a drop in the market, then put it all in at times like that?

Also, I'm new to investing, so any other advice would be greatly welcomed!

Best Answer:

Prof: A plan of regular investing in Vanguard with a fixed amount each time takes advantage of dollar-cost-averaging, which results in your buying more shares when the price is low and fewer shares when the price is high. This results in a lower average price per share and is advantageous for a long-term strategy of investing in an index fund.

You cannot predict the direction of the market, and a regular monthly investment, even if you cannot invest the same amount each month, is better than trying to time your investment to hit the low prices. Regardless of what the market is doing when you make your investment, over a long-term period (10 or more years) your investment in an broad index fund will grow at the rate of about 9 percent per year. The important thing is to be consistent in your saving and investing.

Other answer:

Prof:
You are correct.

it is better to have an automatic saving plan, and then buy at a specific moment when a stock appears undervalued to you. The other side of the coin is to decide upon a specific moment to sell the stock or fund. Don't just keep buying a stock or fund without knowing what to do when the price drops. you have to learn when to sell also.

good luck. you have the right idea.

tiescore:
Yes and yes. I invest every PAYCHECK AND put a little in cash in the event of a absolute steal arising. Have a plan, take emotion out of it.
Bob:
every month is best – it is called dollar cost averaging
james:
Were
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