How to Approach Investing When the Markets Reach All-Time Highsby Linda Terrill Writer
We live in a highly volatile world where our actions and reactions are often determined by unprecedented events. Investing is one such action, which is triggered and deterred by the present market conditions, our emotions, and unexpected events.
Mindsets change, strategies switch, and tactics transform in accordance with how the market behaves, especially in the case of an all-time high. Where the well-known investment saying emphasizes on buying low and selling high, at times investors beg to wonder if the risk of investing when the market has reached its peak a smart decision.
Even as the temptation to sell and wait for the high wave to pass is often considered apt, it is advised to not allow your financial decisions to be based on short-term distractions that can curtail your long-term financial progress. Therefore, the following investing steps must be followed when faced with an uncertain market:
Historically, it has been observed that over the course of time, markets tend to move in an upward direction more frequently than spiraling downward. Therefore, instead of pulling out or limiting themselves to inactivity in a bull market, investors must invest systematically by opting for dollar-cost averaging. Plunging money into the market at regular intervals effectively helps in smoothing out any short-term fluctuations, and simultaneously helps in improving your investment portfolio.
Keeping your emotions at bay, an investor must focus on building a well-diversified investment portfolio which is duly capable of weathering the storms that may occur in the face of an abrupt low following an all-time high. Rather than worrying themselves sick over the future of a market that has already peaked, it is critical that they spread the foundation of a sturdy ground to fall back on.
Although, markets peaking to unmatched highs can be rather unnerving, it is necessary for an investor to approach this uncertainty by adopting the dollar-cost averaging strategy, whilst softening the blow by creating a diversified investment portfolio. As these long-term strategies favor long-term investors who are determined to stay the course.
Created on Jan 14th 2019 06:10. Viewed 256 times.