Buying Shares

Lately we have read few articles on buying shares. We would like to share their views with you.

First, it is talking about timing your entry. Analysts point out that unless luck is on your side you're likely to be out of the markets when you should be in them. It is better to be in the markets all the time, and ride out the inevitable ups and downs.

The advice is that over the long term, share markets rise in value. So, invest in them and stay invested, and only sell when you need the money for urgent and worthwhile purpose.

They recommend the "dollar cost averaging' method of investing. You simply decide to invest a set amount on a set schedule into a set investment, and stick to it. So market timing becomes irrelevant. One important issue is how to construct 'a set investment'. You have to do research on what shares to invest. Blue chips is one of the consideration but you have to monitor the earning and management of the company you invested. (Next blog is discussing about undervalued shares)

A mathematical aspect of dollar cost averaging is that when markets are down, your set, regular investment will buy you more shares and markets are up, it will buy you less. Long term, this has the effect of averaging out the price you pay, you won't pay too much either. Through dollar cost averaging you will build up an investment portfolio without having to worry once about when to invest, how much to invest.