Many actions that improve financial health are related to reducing uncertainty – like setting money aside for emergencies, saving for a child's education, or buying insurance – but investing inherently requires taking on additional risk.
Investing is committing some of today's money to the pursuit of future benefits, either in the form of income (like interest and dividends) or growth (like property value increases). All future-facing plans involve risk, but we can smooth out the ups and downs of stock market investing using techniques like Dollar Cost Averaging.
Dollar Cost Averaging is the practice of buying the same dollar amount of the same investment over regular intervals, like a consistent amount from each paycheck into a broad stock market index fund. The price will go up and down from paycheck to paycheck, but Dollar Cost Averaging ensures that you will buy more when the price is down (your fixed-dollar purchase goes farther), less when the price is up, and over long stretches of time the average price paid will be slightly lower than the average market price. Neat!
Timothy Iseler, CFP®
Founder & Lead Advisor
Iseler Financial, LLC | Durham NC | (919) 666-7604
Iseler Financial helps creative professionals remove stress while taking control of their financial futures. As both advisor and accountability partner, we help identify current strengths and weaknesses, clarify and refine your long-term goals, and prioritize understandable, manageable, and repeatable actions to bring long-term financial well-being. Reach out today to take the first step.