Repeat after us: There is no right time to invest, except maybe right now. And next week. And the week after that.
In this article, we’ll be talking about how investing regularly is a key part of The Stash Way.
Investing regularly is a better idea than trying to time the market
By investing regularly over time, adding more money when you can, you can avoid the perils of trying to time the market.
Timing the market is when you make guesses about which way the market will head, and buying or selling stocks based on those guesses, and it’s almost never a good idea.
No one has a crystal ball. By investing regularly, you can take your eye off the day-to-day noise of the market while feeling confident that you’ll be capturing the highs of the market, as well as the lows.
Why are the lows important? You can buy more of the investments you want at a cheaper price. That’s called “buying the dip.”
It’s important to note that investing regularly and dollar-cost averaging is not a protection against market volatility. It’s possible that during a serious market correction, dollar-cost averaging may not protect you.
Nervous? You can invest regularly in bonds and stocks
Not everyone has the same appetite for risk. And you may not want to keep adding to your stock holdings when the market goes down. (In fact, there’s a definite danger to having too much of your portfolio invested in stocks.)
If that’s the case for you, you might consider investing regularly in bonds.
Here’s the thing about the bond market: it doesn’t necessarily correlate with stocks. So, when the stock market falls, or even enters a correction or bear territory, bond prices may rise, or increase in value. There are also many different types of bonds, which can help you diversify.
Treasury bonds, issued by the U.S. federal government, are some of the safest bonds around since they are backed by the federal government. Investment grade corporate bonds, often issued by companies with a long history of profits and sales, can also be a good addition to your bond portfolio.
Something else to keep in mind: You can also invest regularly in something called defensive sector stocks. These are stocks in sectors such as consumer staples, health care, and utilities, that tend to be less volatile than other sectors.
That means, regardless of what’s going on in the economy, that consumer demand for the products and services produced by companies in defensive sectors is likely to remain stable.
Think about it: you will always need toothpaste and toilet paper from consumer products companies; similarly, consumers will always need to go to the doctor, or purchase prescriptions from health-care providers, and they’ll always need electricity and water from utility companies.
Stash has a tool called portfolio diversification analysis. This tool is available to any Stash customer with an invest account, and it can help you take small steps to craft a more diversified portfolio.
Turn on Auto-Stash
One way to Stash can help you invest regularly is through Auto-Stash. It’s an easy-to-use tool available on the app that can help you save or invest small amounts of money consistently over time, regardless of market conditions. You won’t have to worry about trying to pick the right time to invest or “timing the market” which we don’t recommend.
You select the amount you want to set aside, when and how often you want to set it aside, and whether you’d like Stash to automatically invest it in your ETFs and stocks, or simply place the money in your cash account. It’s an easy way to save and invest regularly, on a schedule that works for you.
Follow the Stash Way
You can invest in a diversified portfolio that’s tailor-made to you. You can start small, adding more money over time. Investing regularly in a diversified portfolio with the long-term in mind is part of the Stash Way, our guide to financial wellness.
The best time to start investing is today. And you can start with just any dollar amount.²