Stick With The Plan
Once you've devised a plan, stick with it. By making regular contributions, you'll not only keep your nest egg growing, but you'll enjoy the advantages of an investment technique called dollar-cost averaging. This involves putting a fixed amount of money into an investment on a regular schedule, regardless of market price.
For example, you invest $100 in ABC Company each month. If the share price is down, you'll be able to buy more shares, and if the price is up, you'll buy fewer shares. Over time, your share prices should "average out," since you'll purchase some shares at a higher price; others at a lower price. While dollar-cost averaging doesn't guarantee a profit or protect you from loss, it does free you from the burden of always trying to hit the market at the "right time."
Using dollar cost averaging does not assure a profit and does not protect against loss in a declining market. Also, using this investment method involves continuous investment in securities regardless of fluctuating price levels of securities. Therefore, an investor should consider his/her financial ability to continue purchasing through periods of low price levels.
Don't chase yields
And don't play the "market timing" game. Although it's important to be flexible, industry specialists caution against jumping in and out of investments in the hopes of making a quick profit. Even experienced investment managers acknowledge that market timing is difficult at best, disastrous at worst.
If you're a new investor, it pays to gather as much information as you can. Read up on investing and money management techniques. Make a periodic review even if you're an experienced investor. It's important to review, and possibly adjust your plan periodically to make sure it's still appropriate. You'll want to review four areas:
Life changes, such as employment, housing or health
Your financial and tax situation
Your objectives & portfolio allocation
Just like a car, you need to keep your plan in tune, to keep it performing at its best. Lincoln Financial Advisors' professionals can provide the information, advice and solutions to help you work toward your financial future and secure retirement.