By SIMON CONSTABLE
The market volatility of recent days illustrates why that old mutual-fund disclaimer—“past performance is not indicative of future returns”—is more promise than warning. It’s also why most people should stick to dollar-cost averaging in index funds.
Dollar-cost averaging is simply the practice of investing a fixed amount on a regular schedule, regardless of where prices go. It’s essentially what you do in a 401(k) plan. Following this method, you tend to buy fewer shares when prices are high and more when prices are low, and are less prone to panic selling when prices dip. See original story here.
Photo by Mahdi Bafande on Unsplash
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