Here are a few basic investment concepts to keep in mind considering the current state of the stock market:
Buy Low, Sell High: When stock prices are low you want to be buying. When stock prices are high you want to be selling. Prices are low now so people should be buying. Anyone who’s selling is losing money.
Dollar-cost Averaging: “The idea is simple: spend a fixed dollar amount at regular intervals (e.g., monthly) on a particular investment or portfolio/part of a portfolio, regardless of the share price. The premise of dollar cost averaging is that the investor wants to guard against the risk that the market may lose value shortly after making his investment.” This is especially applicable to retirement accounts. If you’ve been putting a particular amount in at a certain interval (every paycheck) keep doing so – the market is low now so you’ll make more profit on the money you’re putting in now than you did or will on money you put in when the market is higher.
Index Funds: Index funds allow you to diversify and minimize your risk by buying some of each stock in the index rather than one particular stock. Some of the stocks in the index will go up, some will go down but historically the index has always gone up overall. I invest in an S&P500 index fund operated by Schwab (my broker). The advantage of using on operated by my broker is that I pay no brokerage fees each time I buy or sell.
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