Money Monday: What is dollar-cost averaging?

Money Monday

LANSING, Mich. (WLNS) – You may have heard the phrase “dollar-cost averaging” but if you’re like most Americans, you may not know what it means. 6 News spoke with local money expert Stephen Schiestel to learn just what dollar-cost averaging is, and how it can help you in your own financial life.

“Dollar-cost averaging basically means is that we invest a set amount on a periodic basis. And so whether that is Monthly, even semi-annually, and the idea with dollar-cost averaging is that we’re going to put the same dollar amount into our investment portfolio And when the markets are doing really well, we’re going to buy less shares. When the markets are doing really poorly, more shares,” said Schiestel.

“So how do we put this into place? How do we decide on that dollar figure that we are going to put aside? So, from a dollar figure, that would really depend on what works for you during whatever the time period, let’s say on a monthly basis. How much on a monthly basis can I set aside, how much is going to be needed in order to hit my goals?”

Schiestel says the best place to start is by talking to your financial planner.

“Obviously, when the markets are doing very great, we’re not buying as many shares and vice versa. If we’re having ongoing personal investment accounts, we could set those up instead of one large contribution, maybe spread it out over,” said Schiestel.

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