PORTFOLIO MANAGERS - SECURITIES ANALYSTS|
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HOW CAN BIAS HELP?
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By investing every month you are helping to smooth the fluctuations in the market that JP Morgan is referring to.
Individuals who invest regularly in different market environments are less likely to allow their emotions to dictate investment decisions.
Since you are investing the same dollar amount each month, you will be buying more shares when the price is lower and fewer shares when prices are higher.
Over time your average purchase price is lower than the average market price for the same period. In short, your money goes further. This technique is referred to as Dollar Cost Averaging.
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When asked what the markets were going to do, renowned investment banker J P Morgan reportedly said, “It will fluctuate.”
We agree with Mr
Morgan. Most of the market’s gains occur in just a few strong,
but unpredictable, periods. You have to stick to a clear plan of
regular investing to be sure you are in the market during these
times.