By Craig Erwin, Ph.D.
A journalist on National Public Radio said that last week was the worst week on Wall Street this year. Although the year is young, the stock market did take quite a tumble. According to CNBC, the S&P 500 fell 2.7%, the Dow fell 3%, and the NASDAQ fell 3.3% last week.
But declines like these are good news for most of us. If we invest a portion of each paycheck, a sharp decline is the best thing that can happen to us; it lets us buy stocks at a discount. This past year many stocks appeared to be selling at a discount, thanks to a bear market. I hope you took advantage.
No matter what the rest of the year has in store, you can use dollar-cost averaging to exploit market declines, continuing to buy stock with every paycheck. Dollar-cost averaging prevents you from buying only when prices are high, ensuring that you buy when the market tumbles as well.
So, let the bad news keep coming and let the stock market plunge. It might be just what the doctor ordered – at least if you want to retire early.
Do you invest regularly? Do you keep buying when the stock market falls?
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