Here's an Investing Strategy That Automatically Buys Low
"Buy low, sell high" must be the best-known investing advice in the universe, and it's the goal of nearly every individual investor. Of course, it's easier said than done -- and most of us aren't very good at recognizing the highs and the lows.
But there's a strategy that can greatly increase your odds of buying at the right time. Read on to learn why value averaging can be such a powerful tool for investors.
You may have heard of dollar-cost averaging, a strategy based on investing a fixed amount of money on a regular schedule. For example, you might pick out an S&P 500 index fund you like and buy $100 worth of shares each month. Because you're always buying the same dollar value of shares no matter what the market is doing, you'll end up buying more shares when the price of the fund is down and fewer shares when it's up. This will lower your cost basis and smooth out your returns somewhat.
Source: Fool.com
