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For new investors, an investment strategy is important to seeking long-term returns. Having a strategy makes it easier to stick to and see funds grow over time. It’s important to not get impatient when thinking about markets, as they go up and down in the short-term. The most important thing is to have a long view on investments, and to have a specific strategy in place to invest. 

One of the best ways over a long-term period to invest is to use dollar cost averaging, or DCA. This strategy divides a total investment amount into small pieces so there isn’t a huge capital outlay to get started in investing. One way that most people do this is by investing a small amount of each paycheck. For example, deploying 10% of each check into Passfolio is a great way to start!

Trying to stay active trading within these markets is tough, especially right now. For example, the volatility index, or VIX, is a measure of market volatility, and is currently very high – the highest it has been for some time. Certain stocks, such as in energy, are doing well right now and popular technology stocks aren’t doing so well.

In this high-risk investing environment, with higher interest rates, the Ukraine-Russia conflict and other global tensions, using DCA can help investors with a lower risk tolerance. And sometimes these types of environments are a great way to invest in preferable stocks.

Dollar cost averaging is a potential way in these market conditions to invest more when the share price falls and less when the share price rises

But that all can change with new events that could come out of nowhere. This is why investors must reduce the impact of market volatility on a portfolio with strategies like dollar cost averaging. In this way, it doesn’t matter what the volatility is. Low volatility or high volatility, taking small amounts of money and putting it into the markets can help for things like retirement decades away.

Investing is more about being consistent rather than worrying about short-term market changes. Dollar-cost averaging, by contrast, refers to the practice of systematically investing equal amounts, spaced out over regular intervals, regardless of price.

Whether you want to invest in stocks, exchange traded funds, US Dollars or crypto, taking 10% out of each paycheck and depositing into Passfolio is the dollar-cost-averaging way to make your investment portfolio grow over time for the long-term.

Investing involves risk, including possible loss of principal.

As with all your investments, you must make your own determination whether an investment is appropriate for you. Passfolio Securities is not recommending or endorsing any security or investment strategy. You should conduct research and perform a thorough investigation as to the characteristics of any securities you intend to purchase.

Dollar Cost Averaging is not an investment strategy without risk, and in certain circumstances, it may not fit your investment objectives. Past performance is no guarantee of future results.

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