Buy Low-Sell High

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#5 - You can buy low and sell high.

One way is dollar-cost averaging. This technique helps you to avoid the risk of putting all your money in the stock or bond market at the wrong time.

When you commit to invest a set dollar amount on a regular basis (week, month) into a mutual fund account or brokerage account, you will end up buying more shares when prices are low and fewer when they are high. Use dollar-cost averaging to invest regularly in markets good, bad and lackluster. It removes the worry of trying to time the market.

Another way is regular rebalancing of your portfolio. Keep an eye on your portfolio. It won’t fly on auto pilot. If you have a target of 25% of your assets in technology, but a booming market has increased that stake to 35 – 40%, you should sell the extra amount and reallocate into underperforming areas.

A big benefit of rebalancing is that it prevents portfolios from being overloaded with stocks or other assets that are rising in price or becoming too light on those that are sinking in value. Rebalancing your portfolio annually or semiannually is a good way to maintain investment discipline.