Quick Cash Corner

The economy has definitely affected people’s portfolios.  Below are five easy tips on how to deal with the current market and use the current environment to your advantage.  Good stocks to invest in now are always available.  Sometimes you just have to look a little harder.

How To Start Playing Stock Market

1. Dollar Cost Averaging

The oldest adage in the stock market is “Buy low. Sell high.”  There is no reason to sell when the market tanks.  Savvy investors recognize that when the market drops there are deals everywhere and take advantage.

This approach takes nerves of steel.  If you do not think you are quite at that level you can do what is called dollar cost averaging. This is done by simply your investment out over time.  By buying at planned intervals you average out your total cost.  Sometimes the price will be low and sometimes the price will be high.  By buying over time you ensure that you buy at the average price.  For more information on how this can protect you click here.

401K contributions are one of the most commonly used methods of dollar cost averaging.

2. Increase your cash cushion

By having an adequate cash cushion you eliminate the chance that you might have to sell when the market is down.  Life happens. Sometimes you need cash quickly and the last thing you want is to have to sell your stock at the wrong time.

3. Don’t chase the hot markets

Hot sectors and rapidly rising stocks are commonly the hardest hit when the markets contract and investors go conservative.  Look for sectors that might have not been performing well for good stocks to invest in..

4. Balance is the key

Diversity within your portfolio is the key.  If you are too conservative you will be eaten alive by inflation.  If you are too aggressive you risk losing your entire bankroll in one prolonged downswing.  Diversify to protect yourself. Click here to learn more.

5. Convert to a Roth IRA

When the market tanks it is the perfect opportunity to convert to a ROTH IRA from a traditional IRA.  There is always a silver lining. If your stock are not valued highly then you will pay less income tax.  Once you have converted your investments will go tax free. Click here to see if this is right for you.

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