With all of the ups and downs in the market these days, people are wondering whether it’s a good time to invest or pull out. There is a lot of fear in the market and investor perception is constantly changing. There are large gains seen on any given day followed by huge sell-offs the next. Amidst all this you may be wondering yourself what your best option or path forward is.

All of this activity in the equity markets can be summed up and described as volatility, and in times of increased market volatility it’s natural for people to be a little leery. Interestingly however, increased market fluctuations are actually better for an investment strategy known as dollar cost averaging.

Briefly explained, one invests a set amount of money at set intervals. For example, you would invest $200 every 2 weeks. As a result, a larger quantity of the underlying investment would be bought when the price is down and less is bought when the price is high. The average price of the investment over time is then necessarily closer to the lower purchase prices.

This strategy may be used in a stable market, but it’s benefits are greatly amplified in a more volatile market because of the large price swings. This strategy is not a substitute for choosing quality investments. It is more concerned with acquiring a quality investment at a low price point (on average). So don’t let the fluctuating markets deter you from investing. Just find a way to have the current conditions work in your favor and perhaps give you an advantage.

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