Part 3/7:
Imagine if you invest heavily in one stock and that stock falters—your financial and emotional well-being could be severely impacted. By diversifying into ten stocks or more, you stand a better chance of maintaining a balanced emotional state and avoiding heightened anxiety over any single investment.
The Power of Dollar Cost Averaging
Dollar cost averaging involves purchasing a fixed dollar amount of a selected stock repeatedly over time, rather than investing all at once. For instance, suppose you decide to invest $1,000 into a stock (e.g., SLV) priced at $20 per share. Instead of buying all 50 shares in one go, you can adopt a DCA strategy:
- Start by purchasing $400 at $20 per share.