April 8, 2022: Today in Yahoo Finance: Marguerita Cheng, CFP® Pro, shares a good way of ‘taking emotion out’ of investing
Yahoo Finance, April 8, 2022 — Marguerita Cheng, CFP® Pro, is featured as today’s expert in a Yahoo Money article by senior columnist Retreat, rally, and repeat. That’s what’s been happening to global stock markets as the Russian invasion of Ukraine continues. Inflation is racing, and gas prices have accelerated. The world is on tenterhooks.
It’s hard for investors to stay sanguine. Dollar-cost averaging and diversification are key, Marguerita M. Cheng, a Certified Financial Planner and CEO at Blue Ocean Global Wealth, in Gaithersburg, Md., recently told Yahoo Live. Click here to watch the video interview.
“It is very difficult to time the markets,” Cheng said. “You may know when to get out of the market, but you may not know when to get back in. So it’s very hard to be right twice.”
Taking the emotion out of investing
The magic of the dollar-cost averaging approach to investing is you set up a system that consistently puts money into the stock market on a regular schedule rain or shine. No drama.
“What I absolutely love about dollar-cost averaging is it is a way of taking emotion out,” Cheng said. “It just basically means that you are investing a specific amount of money in the market at specific times.”
Sometimes you buy high, when stocks are pricey, and sometimes you buy low, when stocks are cheap. The timing has nothing to do with the daily swings in the market.
That means there’s no reason for hand-wringing when the market gets jittery because when you’re investing constantly whether the market is up or down, it creates a natural balance that smooths performance out over the long-run.
“Believe it or not, many of us are doing it, when we participate in our employer-sponsored retirement plans, or we’re saving money in our children’s 529 plans, or we have automatic contributions to a Roth IRA or a traditional IRA.” Cheng said. “And it just means that we are investing on the highs, as well as the lows.”
Cheng is realistic. Click here to learn why!