In the middle of the economic crisis caused by the Covid-19 pandemic, markets have turned volatile. Now is the time to keep a long-term focus. Read this article to understand how to do this.
As an investor, the best way to reduce the short-term effects of market volatility is to concentrate on the long term.
Here are several investment strategies that may help you achieve this objective.
On the surface, market timing sounds intriguing, but, in reality, predicting market moves is difficult, if not impossible. Buying an investment and holding it for the long haul can help keep you focused on your goals and reduce the anxiety that often is experienced with market timing.
By spreading your portfolio amongst investments of differing styles and objectives, you may potentially reduce the risk of significant loss should one issue underperform. But simply investing in different things isn’t enough. Carefully look at each of your investments to be sure they complement each other and are not redundant.
Dollar cost averaging
With dollar cost averaging, you invest a fixed amount at predetermined intervals (e.g., monthly). When share prices increase, you buy fewer shares. And when share prices decrease, you buy more shares.
Although market volatility has reached historically high levels, similar periods have come and gone, so it’s important to keep things in perspective. By maintaining a long-term focus, you may position yourself better in order to meet your financial goals. A qualified financial professional can help you identify which strategies may be best for your situation.