Make peace with the markets zig zag ups and downs

When you’re investing in a bear market, it’s easy to forget that share prices can go up as well as down.

This daily volatility scares people off during bull markets, too. It can be hard to watch your net worth fluctuate according to the whims of Wall Street (which is one reason I believe it’s better to focus on your portfolio income).

At least this volatility is potentially making you richer – provided you’re trickling money in regularly over the long-term.

With so-called dollar-cost averaging, you buy more shares when they’re cheaper and less when they’re expensive. The volatility actually improves your returns.

Mike at Oblivious Investor created this three-minute video showing the maths:

Further reading:

  1. Hands off our falling house prices
  2. How fear is driving bank share prices
  3. How to protect your portfolio from share price falls

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