Did you buy the dip?
The stock market provided an excellent buying opportunity for buying stocks on sale, but few people took advantage of it.
If you did, good job!
After the fearful time that created the dip subsides, that is when most people buy.
After the dip is over.
Why is that?
Because they don’t feel certain that the stock market will resume its climb.
Only after it resumes its climb is the fear gone and people are comfortable buying more.
However, savvy investors buy the dips.
How can you gain more confidence to buy during dips?
I’m going to share with you five ways to feel confident to buy the dips:
1. Stay focused on the long-term track record of the stock market. Remember that on average the stock market increases 10% per year. Some years more, some years less, but over time 10%. Understand the stock market is likely to rise 10% over the next 12 months after your purchase.
2. Stop trying to find the exact bottom. No one can pick the exact moment the stock market bottoms, that is a loser’s game. It does work to buy at the point of maximum fear, however. If you can identify when “the crowd” feels most fearful, that is usually the best time to buy. For example, on a day there is a large percentage decline, it shows the crowd is feeling a lot of fear and you can get a bargain.
3. Be okay with dollar cost averaging, or buying in multiple investments, rather than trying to time it perfectly. Try investing over a period of time or at regular intervals (like in your 401(k)), rather than in one big buy, however, one big buy is better than none at all if you want to accumulate more.
4. Stop looking at your account while the stock market is correcting. Since you are invested for 3 to 5 years or longer, why do you need to look at it today? The only day the balance on your account needs to be high is on your retirement day.
5. Look forward to dips and corrections so you can buy on sale. Savvy investors have conditioned their mindset to think about buying stocks on salewhen they decline. They get excited to invest in cheaper shares and buy more shares than when the price was higher. It is all how you think about it.
There you have it. These tips will serve you well as you invest.
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