It might be hard to see a stock market drop as an opportunity, but it can be
Unless you work in finance, it can be easy to forget about the stock market — that is, until it's down.
A big drop can send the economy and investors into a panic as it affects everything from your investing portfolio to your 401 balance. But markets are cyclical, and what goes up must come down. Even though it might seem like a bad sign that markets are down, it's generally just part of the ebb and flow of economic cycles over the long term.
However, there are a few ways that you can take advantage of stock market dips. These four things get easier when the market is down:Dollar cost averaging is a strategy where an investor regularly buys a set amount of stock, no matter where the market is at that time. By spreading your investments out over time, you could lessen the impact of market ups and downs, and smooth the ripples of the stock market when stocks are held for many years.
The opposite of this strategy, called 'timing the market,' relies on waiting for lower costs to buy, and higher costs to sell. Experts generally recommend against timing the market, and financial planner Howard Hook ofHook suggests his clients ignore the market fluctuations. "We're not market timers. We're doing long-term buy and hold," he says. "If you have cash and you're ready to invest, now should be no different than any time.
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