maintaining a portfolio of several assets
, such as stocks, bonds, real estate, and cash. This approach has several benefits, including spreading your risk across multiple assets. In addition, investing in several types of assets gives you exposure to different markets, which can have negative correlations with one another. This helps protect you againstDollar-cost averaging
As we saw in the example above, dollar-cost averaging doesn’t always produce the best results in the long term. However, investing all your money immediately can be scary. It can feel like you are giving up control of your portfolio, and not all investors are comfortable with that.. Rather than invest all your money immediately, you invest periodically, such as once per month.
Even though the market has had many big drops in that time, it has always recovered, eventually moving higher than its previous high. Simply keeping your money in the market will allow you to take advantage of this growth. While the big drops can seem scary, history has shown that the market always recovers, only to come back stronger.A popular expression in personal finance communities is, “time in the market beats timing the market.