| There is an investing technique that will lower | | | | successful dollar cost averaging plan is consistency. |
| market risk and allow young investors to benefit | | | | You can increase your investment over time but |
| from long-term growth. This technique is called | | | | avoid investing different amounts each month. |
| dollar cost averaging; and it's a great technique to | | | | 2. Set up the exact times you invest. If you |
| combine with broad based index fund investing. | | | | decide to invest once per month do so on the |
| Long-term gains using a dollar cost averaging plan. | | | | same day. For instance, the fifth of every month |
| Dollar cost averaging allows young investors to | | | | invest $150. This is made simple with help from an |
| purchase stock investments consistently over a | | | | automatic investment plan. Set this up one time |
| longer period of time. This stock market strategy | | | | and your investments are made automatically for |
| works especially well with broad-based market | | | | you each and every month. All you have to do is |
| index investments like the mutual funds and ETF's | | | | check your statements to see how your |
| that mirror the return of the S&P 500. This | | | | investments are doing. |
| powerful and simple investment plan will help lower | | | | Improve your dollar cost averaging plan through |
| risk and you have the potential for higher returns. | | | | diversification. |
| For young investors looking for consistent gains | | | | Diversification is a simple spreading out the risk of |
| over time, establishing a dollar cost averaging plan | | | | owning a stock investment by owning many |
| could be a perfect solution. Young investors are | | | | different stocks in a variety of sectors. Owning a |
| able to purchase more shares when the stock | | | | group of stocks, instead of an individual stock, |
| market experiences short-term corrections. That | | | | could further reduce your risk. This will reduce the |
| way when the index turns around and starts | | | | risk of owning any single investment. The |
| heading up in value young investors are able to | | | | investment of choice for many young and |
| profit more because they own more shares. | | | | beginning investors is broad based indexes. |
| When the market is rising young investors are | | | | An example of a broad based market index is the |
| able to capitalize on the market trend because | | | | S&P 500. By investing in the S&P 500 |
| they are following a consistent investment plan. | | | | index you own a piece of every stock that |
| As they purchase more and more shares in a bull | | | | makes up the S&P 500. Stocks like American |
| market that money is going to work for them | | | | Express, Google, Ford, Nordstrom, Home Depot, |
| right away. | | | | Staples and Yahoo are a few of the stocks that |
| Dollar cost averaging spreads the prices that you | | | | make up that index. That way you're protected in |
| purchase stock market investments (cost basis) | | | | case one of the stocks in the S&P 500 |
| over a longer period. Investors are protected | | | | drops 70% of its value, you're only invested 1 |
| from stock market corrections and benefit from | | | | 500th, and you won't experience too much loss |
| long-term gains in the market. | | | | from that. In comparison, if you just owned that |
| Steps to creating an effective dollar cost | | | | stock by itself you would have lost 70% |
| averaging plan. | | | | immediately. |
| For young investors creating a successful dollar | | | | For young investors, keeping your investments |
| cost averaging plan is simple. There are two basic | | | | diversified and using a dollar cost averaging |
| steps that will get your money working for you: | | | | investing technique - you have effectively |
| 1. Decide on the exact amount of money you will | | | | reduced risk and are in an excellent position to |
| invest each and every month. The key to a | | | | achieve long-term profits. |