{"id":76982,"date":"2024-10-01T00:00:24","date_gmt":"2024-10-01T04:00:24","guid":{"rendered":"https:\/\/todaysveterinarybusiness.com\/?p=76982"},"modified":"2025-08-12T11:33:40","modified_gmt":"2025-08-12T15:33:40","slug":"guide-investing-money","status":"publish","type":"post","link":"https:\/\/navc.sitepreview.app\/todaysveterinarybusiness.com\/invest-financial-wellness-1024\/","title":{"rendered":"A Guide to Getting Started in Investing Money"},"content":{"rendered":"

Sincere people ask themselves and others this question regardless of market conditions: \u201cIs now a good time to invest?\u201d We\u2019ve always believed (resoundingly and without exception or hesitation) that \u201cYes, now is a great time to invest!\u201d Why such extravagant confidence? Because the plethora of historical evidence supports it and because the only alternatives to \u201cInvest now\u201d are \u201cInvest later\u201d or \u201cInvest never.\u201d Sadly, smart and thoughtful people too often do the wrong thing.<\/p>\n

Historically, the broad U.S. stock market<\/a> has had positive returns in about 70% of calendar years. No one has consistently predicted those 30% of the years it will go down. So, in other words, uninvested idle money penalizes you more than two years out of three.<\/p>\n

\u201cBut wait, this time is different,\u201d you say. \u201cWhat about the presidential election? The economy? Inflation? The federal deficit? The war in Ukraine? The Middle East unrest? Future tax laws? Environmental disasters? Open borders?\u201d<\/p>\n

The world has always had a laundry list of things to worry about. Acting on the belief that \u201cThis time is different\u201d typically causes enormous financial harm when people wait to invest and miss 70% of the years when the market advances.<\/p>\n

As of this writing, the broad U.S. capital markets are at record highs. The S&P 500 is more than eight times its March 2009 value. The tech-heavy Nasdaq is more than 14 times higher over the same period. Did your portfolio keep pace? If not, we bet you weren\u2019t fully invested over that period. We can\u2019t find academic evidence supporting jumping in and out of the capital markets, as it\u2019s a fool\u2019s errand. Once committed to a diversified portfolio, stay the course regardless of the headlines.<\/p>\n

How to Handle Windfalls<\/strong><\/h3>\n

On rare occasions, someone receives a large amount of cash all at once \u2014 for example, upon selling a veterinary practice or home or from an inheritance or life insurance proceeds. Should the recipient invest that big lump sum all at once or do it slowly and regularly over time?<\/p>\n

Most of us are comfortable having hundreds of dollars subtracted from every paycheck to fund our workplace retirement plan. And very smartly, most of us stick with it through thick and thin, good times and bad, regardless of the day\u2019s news. It\u2019s another thing entirely to contemplate putting thousands or millions of dollars into the capital markets all at once.<\/p>\n

Lump-sum people always ask, \u201cIs now a good time to invest?\u201d The answer is always \u201cYes!\u201d The math and historical evidence support investing the entire lump sum all at once. Yet, that tactic seems risky to some folks. If you invest a lump sum today, the broad capital markets might plummet by 50% tomorrow. At that point, you rightly will feel very sick. That\u2019s why the thought of gradually investing a lump sum is more comfortable emotionally.<\/p>\n

Manage the Risk of Regret <\/strong><\/h3>\n

Dollar-cost averaging, or investing a fixed amount at regular intervals, is an academically grounded strategy. It ensures catching the market\u2019s downs and ups, buying low and buying high.<\/p>\n

Dollar-cost averaging is a strategy for reducing risk rather than maximizing returns. It exploits Wall Street\u2019s only certainty: Stock and bond prices fluctuate. Using dollar-cost averaging, you make the market\u2019s natural short-term volatility work in your favor. Since the amount you invest remains constant, you buy more shares when the price is low during temporary downturns (\u201cbuy low\u201d) and fewer shares when the price is high. As a result, the average amount you pay is always lower than the average price per share. It\u2019s not magic, just simple arithmetic.<\/p>\n

Of course, dollar-cost averaging cannot eliminate the risks of investing in financial markets. It does not ensure a profit or protect against a loss in declining markets, nor will it prevent a loss if you stop when your account value is less than the cost.<\/p>\n

Carefully consider your financial and emotional willingness to continue investing during an extended market downturn. The program\u2019s success depends on you making regular purchases. Don\u2019t chicken out when the sky is falling.<\/p>\n

While no method guarantees a profit if you sell at the bottom of the market, patient investors who contribute fixed amounts in regular installments reduce the loss incurred if the market declines sharply after a single large investment.<\/p>\n

Similarly, don\u2019t do it all at once if you decide to sell a portion of your holdings. Dollar-cost averaging is a rational way to exit or spend down your accounts upon retirement. Don\u2019t run for the doors and sell out of equities. Instead, redeem shares gradually through a regular series of transactions. If you\u2019re anxious about the markets, sell to the point that you sleep comfortably through the night.<\/p>\n

We recommend that you not make significant, abrupt changes in your chosen asset allocations. Don\u2019t abandon any asset class regardless of market conditions. Remember that equities (stocks) are your only option for outpacing inflation after taxes. Over longer periods, a globally diversified portfolio of stocks outperforms all other types of investments.<\/p>\n

Systematic Investing<\/strong><\/h3>\n

Although dollar-cost averaging means some of your money sits idly for months and might dampen your overall returns, it\u2019s the most reasoned approach for the cautious investor. Why? For the following reasons.<\/p>\n