{"id":22874,"date":"2023-09-28T10:51:46","date_gmt":"2023-09-28T10:51:46","guid":{"rendered":"https:\/\/isafespend.com\/personal-finance\/wealth\/how-investing-can-be-counterintuitive\/"},"modified":"2023-09-28T10:51:47","modified_gmt":"2023-09-28T10:51:47","slug":"how-investing-can-be-counterintuitive","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=22874","title":{"rendered":"How Investing Can Be Counterintuitive"},"content":{"rendered":"
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Investing isn\u2019t always straightforward \u2013 in fact it can sometimes feel counterintuitive. Sometimes we find ourselves in the position of putting money into investment accounts only to see the totals continuing to go down instead of up \u2013 but that\u2019s where it\u2019s important to understand investing concepts such as dollar cost averaging. It\u2019s especially important, the closer you get to retirement, to understand how investing can be counterintuitive, so you don\u2019t make any rash decisions.<\/p>\n

Dollar Cost Averaging<\/h2>\n

Often, people wonder why they should keep buying into the stock market when every day it is less and less. You may find yourself putting money into a 401(k) and finding that the next day, it\u2019s worth less than the day before when you put it in. While this feels like an exercise in insanity, investing is different.<\/p>\n

When you\u2019re investing, you\u2019re not just putting your money in a bank, you\u2019re investing in companies \u2013 and these companies are the largest in the world and the key to our economy. The ownership that you purchase in these companies means that the more stock you own, the more of the company you own. It\u2019s important to note that when stock prices are down, the same dollar amount you invest nets you more stock \u2013 so for example if you invest $1,000 in a company and the share value is $1,000 today, then you own one share. Meanwhile, if tomorrow the shares are trading at $100 per share, and you bought $1,000 worth you\u2019d own ten shares.<\/p>\n

When it comes to buying stocks, you want to purchase that stock as low as possible and when you own it, you want it to be as high as possible. Ideally, you\u2019d buy all of your stock at a discount and while owning it, it would be at the highest possible price. In reality, the market is constantly changing, so that the environment is sometimes better for purchasing and sometimes better for owning or selling.<\/p>\n

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With dollar cost averaging, you\u2019re investing consistently in the market so that you\u2019re less impacted by volatility and you end up buying more shares at a lower cost.<\/p>\n

It\u2019s Counterintuitive<\/h2>\n

The worse time to stop buying into the markets is the exact time when it feel futile \u2013 when you feel your money going down right after you put it in. It\u2019s actually the best time to buy, because you\u2019re buying at a discount, but you need the patience to wait it out. While this intuitively makes sense, it can emotionally be a demoralizing act to deal with.<\/p>\n<\/div>\n

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Disclosure: Diversified, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. A copy of Diversified\u2019s current written disclosure brochure which discusses, among other things, the firm\u2019s business practices, services and fees, is available through the SEC\u2019s website at:\u00a0<\/em>www.adviserinfo.sec.gov<\/em>.\u00a0Investments in securities involve risk, including the possible loss of principal. The information on this\u00a0website is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investing isn\u2019t always straightforward \u2013 in fact it can sometimes feel counterintuitive. Sometimes we find ourselves in the position of putting money into investment accounts only to see the totals continuing to go down instead of up \u2013 but that\u2019s where it\u2019s important to understand investing concepts such as dollar cost averaging. It\u2019s especially important,<\/p>\n","protected":false},"author":1,"featured_media":22875,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"class_list":{"0":"post-22874","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-wealth"},"yoast_head":"\nHow Investing Can Be Counterintuitive | iSafeSpend<\/title>\n<meta name=\"description\" content=\"Investing isn\u2019t always straightforward \u2013 in fact it can sometimes feel counterintuitive. 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