Dollar Cost Averaging in Investing Explained


Dollar cost averaging is a great way for someone
to start investing without too much risk.
In this video, I’ll explain what it is and
how you can start doing it right away.
Hi there, it’s Matt from Greatness EveryDay
and I want to say thanks for watching this
video.
The information that I’m going to share
with you today is something that I’ve done
a lot of research on when I was trying to
figure out the best way for me to start investing
my money and I feel it will help answer the
same question I had when I started which was
“How can I invest with minimal risk?”
Before I started any type of investing, my
mindset was “Investing is too high risk
and I could lose everything, so I’ll just
keep my money in my bank account where it’s
safe.”
And that’s okay for safety and comfort,
but I wanted my money to go further.
This mindset was holding me back and it wasn’t
until I started challenging myself to really
look at how I use my money, that my mindset
changed.
Simply put, dollar cost averaging sees the
investor buying a fixed dollar amount of an
investment at regular intervals.
For me, I take 10% of each paycheck I get
and put that in my investment account, and
then I buy the amount of shares I can purchase
with that 10% every two weeks.
I don’t spend any time day-trading, or staring
at a computer screen watching green and red
lights flash and I have complete control of
the types of investments I purchase.
If the price of a stock goes up, I buy fewer
shares, and if it goes down, I buy more, but
the dollar amount is consistent.
So now that you know what dollar cost averaging
is, how do you start investing?
This is what I’ve done:
The first thing I did was be financially transparent
– ask yourself if you have the money to invest.
I looked at my situation and said that I’d
rather invest a small amount of money instead
of going to a movie or eating out a lot, so
I was comfortable taking this risk.
The second thing I did was I made a game plan
– do some research and find out how much money
you should invest and where you should invest
it.
Do you want to purchase individual stocks,
or something like an index fund?
Maybe you want to go for something higher-risk
like cryptocurrency?
There is a lot of great information related
to investing on the internet and on YouTube,
but don’t believe everything that people
say.
Some people are paid to promote a certain
product or service, so do your homework.
Finally, I encourage you to actually write
your plan down.
This will make it easier for you to stick
to it and have a strategy, so you aren’t
just throwing money at random stocks.
The third thing I did was I opened an investment
account with my banking – There are other
ways to purchase investments, but for people
just starting out, I think this is safest.
The fourth thing I did was I stuck to my game
plan – you have to give it time for things
to play out.
If I invest $100 today, I don’t expect it
to TENX by tomorrow.
That’s not how the traditional stock market
works.
You can always change your plan if you think
it’s necessary, but don’t change it too
often.
The last thing I did was I learned from experience.
When I first started my research, I was asking
anyone who knew anything about investing tons
of questions – in fact I probably annoyed
them, but I wanted to learn.
I spent a lot of time doing my own research
online and I made an appointment with my bank
to speak with a financial advisor who was
able to walk me through my investment program
and answer any questions I had.
So I hope this video helped you understand
how I started investing.
If you want to know more about dollar cost
averaging, or any other subject, please let
me know in the comments below!
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You can also visit our website at www.greatnesseveryday.online
. Thanks for watching and I’ll see you in
the next video!

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