Unnerved By Surging Markets? Try Value Averaging
With the U.S. market continuing to hit new highs, many investors are wondering whether it’s a case of too much too soon.
During the past 10 months, the S&P 500 has risen nearly 24 per cent, including dividends. Vanguard’s MSCI Canadian stock ETF hasn’t kept pace, but it’s up 14 per cent since June.
If fast market rises make you nervous, you might consider a “value averaging” investment strategy. It ensures that you invest more money when markets are in a funk and less when markets are rising. The strategy has a long track record of success, and has worked marvelously over the past five years with the Canadian, U.S., International, and Emerging Stock Market indexes.
It doesn’t involve speculative decision-making either.