Quick Investing Tip: When to Invest
Over the last 2 weeks, I’ve resisted selling off my mutual funds and ETFs (I don’t hold individual stocks) after watching all the value gained in 2007 plummet and even go negative. Here’s one mantra that I’m constantly reinforcing into my head:
Buy Low, Sell High
One problem with us investors is that we get in a panic. We honestly won’t know how low prices will go or when they’ll start climbing again, but I want to remind you that in all likelihood, prices will go back up again. Of course major catastrophes could affect the number of months or years it would take to recoup your losses, but for me, I’m young (29) and can take the heat. I have no plans on pulling out our investments until we retire, so I’m only marginally worried about a total loss of my invested dollars.
That’s also why I only invest in funds, not individual stocks. There’s far less likelihood that an entire fund will go bankrupt unless the manager did some very naughty things (how often do funds go “out of business”? Help?) compared to a single stock.
So when the market was taking a nosedive on Wednesday, I put in order for 75 shares of PBW. Unfortunately, it pulled back up before it hit my price point, so I didn’t get it for $19 per share. The order is good for 60 days, and it takes a lot of control to not bump up the offer price just to “buy it now”. I’m forcing myself to wait and see.
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Clever Dude and his bride started with $500k in debt and in just 4 years, it's down to $300k!
I’m certainly not an investment expert. We have some small investment in a few different funds. I try not to check it too closely or I’ll end up selling every time something dips. Investing isn’t insurance but the odds are usually pretty good that things will go up if you don’t get too caught up in the volatility.
Good tips. For most investors, they are better of investing in an index fund.If you are going to buy individual stocks, only buy what you know.
Good advice – there is nothing wrong with re-tooling your asset allocation if necessary but not during a market panic.
Mike
I would advise against any sort of timing strategy to investing. Instead, I think the best way is to set up an automatic schedule that “forces” you to invest at regular intervals, no matter what the market is doing. It removes a lot of the stress and makes you impervious to the never-ending chatter of the market.
However, I do think that in times like these, where stocks and funds have dropped so much, that investing more than usual is a good thing.
Instead of buy low, sell high I say buy more low and never sell.
What do you think about the Monetta Young Investor fund as a core holding in saving for college. I also earn 5% per year of my account value in free college tuition credits that can be used at over 200 colleges nationwide.
Bob, unfortunately (or maybe fortunately), I don’t know much past the few funds I’ve invested in. And those were pretty much throwing a dart at the wall anyway. If it has decent history, matches your risk needs and is low cost (funds do cost money outside of your investment dollars), then it’s fair game. There’s obviously much more to it than that, but that’s about as far as I’ve gotten in my research of funds.
I didn’t realize you were so young!
Vixen, should I rename myself “Clever Kid”?
Sometimes it’s easier if you’re in for the long haul. I would go crazy watching that rollercoaster stock market if I was only doing short term investing!UGH!