Brittany Waldrep

Earlier I have told my friend about the importance of “paying yourself First.” Not only does it help you start—and keep—investing on an ongoing basis, it can launch you into a strategy that works well for a lot of investors. Dollar-cost averaging, as it’s called, not only provides you with the structure and the discipline to invest consistently over time, it also works well for anyone who is feeling a bit hesitant about diving right in—and wants to spread out his or her investments over time.
This is how it works. Every month (or at any regular interval) you invest a set amount of money—regardless of how the stock market is performing. When the markets are down and prices are low, you wind up purchasing more shares for your money. Your friends will wonder why you’re able to maintain your composure as the value of your stocks tumbles—but since you’re in this for the long haul, a dip in the market means an opportunity to scoop up a greater numher of shares at lower prices. When the market and prices are up, you’ll buy fewer shares (just as you do when a sale ends and prices return to full retail). Over time your average share cost (how much you actually spend) can wind up being lower than the average share price.