Money: “4 Investing Moves to Make Instead of Panicking About Volatile Markets”

Money magazine, May 16, 2022 — Marguerita Cheng, CFP® Pro, is featured in today’s Money magazine article by Mallika Mitra who writes, “When stocks are plunging, the best advice is often to do nothing. You’re not supposed to panic or make rash changes to your investing strategy. But doing nothing while your portfolio tanks can be hard. Fortunately, if you’re the type who must do something when markets get extra volatile, there are a few sensible and safe steps to consider that could help your finances (and your stress levels).”
Tip of the day from Marguerita Cheng: Start dollar-cost averaging.
Mallika explains: “While it may be tempting to try to buy the dip when stocks plunge, experts say setting up an investing strategy that will work for you in the long term is a much more reliable way to build wealth in the market.”

Investors should consider investing modest amounts of money at regular intervals, says Marguerita Cheng, a certified financial planner at Blue Ocean Global Wealth. This technique is called dollar-cost averaging.

“The most important thing is time in the market, not timing the market,” Cheng says, noting you’ve probably heard it’s unwise to try to time the market’s ups and downs. No one really knows where stocks are heading on any given day, and it’s risky to keep your money on the sidelines while waiting for the moment you think the market will bottom out.

By dollar-cost averaging, you remove the temptation to even attempt to get the timing right and assure that your money is invested on the market’s very best days. (Someone who invested in the S&P 500 in 2001 would have cut their returns in half by 2022 if they missed the 10 best days of the market, according to a report by J.P. Morgan Asset Management’s 2022.) If you have a 401(k) that you contribute to with every paycheck, you’re already dollar-cost averaging.

“It takes the emotion out of it,” Cheng adds.