The Easiest Way to Start Investing in an Uncertain Market

Now may be a good time to talk to younger family members about dollar-cost averaging.

If you’re a parent or grandparent watching the younger generations step into investing for the first time, now may be a good time to talk about dollar-cost averaging.

In a market sitting at all-time highs with the recent artificial intelligence (AI) boom, along with global tensions and inflation eating away at our gains, it can feel impossible to know the “right” time to invest. That uncertainty alone often freezes many first-time investors.

But dollar-cost averaging offers a simple, time-tested solution: Invest a fixed amount regularly no matter what the market is doing. (See the AAII How-To column in this issue for a complete explanation.)

For a beginner investor, dollar-cost averaging shifts the focus away from reacting emotionally to moving ahead with steady discipline. Still, dollar-cost averaging is not without challenges, such as:

The urge to stop investing when markets drop,
The possibility of earning less than you might have if you’d invested all at once in a rising market,
Less money working for you early on and
The need for consistency in the absence of automation.

How do you encourage younger investors starting out to stay consistent with investing during market highs and lows, especially when dollar-cost averaging feels slow or uncertain? Join the discussion in the AAII Beginner Investor Community.

Make sure your family members have a plan, practice patience and are willing to learn what works best for them and their goals.

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