Investing for the long term

Buying mutual funds as long-term investments

When thinking about investing, many people tend to think about timing. "Buy low, sell high" is the catchphrase that just won't go away. But the truth is, no one can really predict the market correctly all the time.

While the fundamentals of the stock market are not difficult to learn, in reality it is hard to figure out exactly how a stock will behave. Financial markets are often volatile so it can seem difficult to invest with confidence. However, you should not let short-term market movements alter your investment approach.

Markets move in cycles. Over short periods, there can be a lot of ups and downs. But the longer you stay invested, the greater the probability that your investment will generate a positive return. One proven strategy is called dollar-cost averaging (DCA).

Under the DCA principle, you invest a fixed amount on a particular investment at regular intervals regardless of the share price. By doing so you can smooth out market highs and lows over time as this approach reduces the risk of investing a large amount in an asset class before an unexpected market downturn.

Remember, success in investing is about time in the market, not timing the market.