The stock market is expected to be down another 2% today. Do these 4 things before you decide to buy or sell. I’m sure you’ve heard “Buy the dip” a million times in the past 5 years. As a wealth advisor, I know I have! Investors have become increasingly smart compared to their predecessors, and are looking for opportunities to win. With the market being down today you may have the itch to “๐ฏ๐๐ ๐๐ต๐ฒ ๐ฑ๐ถ๐ฝ”.
But the question is, ๐ช๐๐๐ง ๐๐ ๐ง๐๐ ๐๐๐ฃ ๐๐๐๐ฃ๐ฆ ๐๐๐ฃ๐ฃ๐๐ก๐?
Here are my 4 tips when thinking about buying the dip.
These are the ๐ฒ๐
๐ฎ๐ฐ๐ 4 tips I gave a client in my office yesterday as we talked about the tariffs and stock market.
1๏ธโฃ ๐๐ฑ๐ฒ๐ป๐๐ถ๐ณ๐ ๐ต๐ผ๐ ๐บ๐๐ฐ๐ต “๐ณ๐ฟ๐ฒ๐ฒ ๐ฐ๐ฎ๐๐ต” ๐๐ผ๐ ๐ฐ๐ฎ๐ป ๐ถ๐ป๐๐ฒ๐๐
Knowing how much you can and should invest is a key part of investing. If you invest too much you may have to sell at an unwanted time, which will almost always creates loses.
๐.๐. You likely shouldn’t put all of your free cash towards investing because you may need it for living expenses or a down payment on a new house or car.
2๏ธโฃ ๐๐ฒ๐๐ฒ๐ฟ๐บ๐ถ๐ป๐ฒ ๐ถ๐ณ ๐๐ผ๐ ๐๐ฎ๐ป๐ ๐๐ผ ๐ฟ๐ฒ-๐ฏ๐๐ ๐ฎ๐น๐น ๐๐ผ๐๐ฟ ๐ฝ๐ผ๐๐ถ๐๐ถ๐ผ๐ป๐
There are times that you may only want to buy only some of the positions you own because not all positions go down in the same amount and same time.
๐.๐. Right now US Stocks are being hit the hardest. International Stocks and Emerging Stocks are actually positive on the year. So you may only want to buy your US Stocks and not buy International or Emerging.
3๏ธโฃ ๐๐ผ๐ป๐๐ถ๐ฑ๐ฒ๐ฟ ๐๐ฎ๐ธ๐ถ๐ป๐ด “๐บ๐๐น๐๐ถ๐ฝ๐น๐ฒ ๐ฏ๐ถ๐๐ฒ๐ ๐ฎ๐ ๐๐ต๐ฒ ๐ฎ๐ฝ๐ฝ๐น๐ฒ”
This refers to the idea of taking your free cash flow from step one and breaking it up into multiple buys to have a better chance at buying at the right time.
๐.๐. Let’s say you have $50,000 you want to invest. You could invest $25,000 now and wait and see with the other $25,000 in case “the dip keeps dipping”.
4๏ธโฃ ๐๐ผ๐ป๐๐ถ๐ฑ๐ฒ๐ฟ ๐๐ผ๐น๐น๐ฎ๐ฟ ๐๐ผ๐๐ ๐๐๐ฒ๐ฟ๐ฎ๐ด๐ถ๐ป๐ด
Dollar Cost Averaging is the idea of continuously buying over time. This is where you invest a set amount over an interval that isn’t dependent on what the market is doing.
๐.๐. Let’s say you have $50,000 you want to invest. You could invest $10,000 a week for the next 5 weeks on every Monday to invest that $50,000.
Following these 4 steps will not guarantee success.
๐๐๐ ๐ ๐ธ๐ป๐ผ๐ ๐๐ต๐ฎ๐ ๐ฑ๐ผ๐ถ๐ป๐ด ๐๐ต๐ฒ๐๐ฒ ๐ฐ ๐๐๐ฒ๐ฝ๐ ๐๐ถ๐น๐น ๐ต๐ฒ๐น๐ฝ ๐๐ผ๐ ๐ณ๐ฒ๐ฒ๐น ๐บ๐ผ๐ฟ๐ฒ ๐ฐ๐ผ๐ป๐ณ๐ถ๐ฑ๐ฒ๐ป๐ ๐ฎ๐ฏ๐ผ๐๐ ๐๐ผ๐๐ฟ ๐ฑ๐ฒ๐ฐ๐ถ๐๐ถ๐ผ๐ป๐.
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