The Fenimore Focus: Investment Tip #3

Take the Emotion Out of Investing:

Dollar-cost averaging, investing a fixed dollar amount on a regular schedule, takes the emotion out of investing and can keep an investor from panicking and doing the wrong thing at the wrong time. The idea behind dollar-cost averaging is to average out the highs and lows instead of trying to time your investments. It allows you to focus on long-term growth and not be swayed by short-term marked conditions.


Dollar-Cost Averaging Disclosure

Dollar-cost averaging does not guarantee a profit or protect against a loss in declining markets. The idea is to average out the highs and lows to help you avoid trying to time your investments. It allows you to focus on long-term growth and ignore short-term market conditions. 

The basic premise of dollar-cost averaging is that over time, the average cost of your mutual fund shares may be lower than the average market price of the funds over the time period that you are investing. While this technique does not eliminate the chances of your losing money on an investment, losses can be limited during periods of declining fund share prices and profits may be enhanced during rising fund share prices. Dollar-cost averaging is a plan of continuous investment in securities regardless of fluctuating prices, an investor must consider his or her financial ability to continue purchases through periods of low price levels. There is no assurance that any strategy will be successful in achieving investment objectives. 

Please see Fenimore disclosure.