Personal finance expert Suze Orman is tired of seeing millennials buy and sell stocks based on what’s trendy or which companies are having a moment in the spotlight.
“The biggest mistake I think young people make when investing is that they buy, they sell if the stock is cool,” Orman said in a recent CNBC Make It segment. “This company is great, I’m going to invest in that, maybe you’ll hit it right or maybe you’ll hit it wrong. I think it would be far better for all of you to adopt a technique known as dollar cost averaging where you take a specific sum of dollars every single month and you invest it. When the market goes up, the shares you are buying the prices go up, so you buy less shares.”
Orman said when the market goes down, the price of the shares go down, so your dollars buy more shares.
“Over the time the cost of those shares are averaged so that you always come out ahead,” she said. “If I were you, I would simply be putting my money every single month into a good no load Standard & Poor’s 500 index fund or the SPDRs, I would do it every single month hopefully within a Roth IRA and I would just do that month in and month out and month in and month out, until you are old and gray and unless you color your hair like me.”
Watch the Suze Orman video here:
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