Finance expert cautions over quick investments into near-record high DOW Jones
It's been a great week for investors with the DOW Jones closing near its record high on Wednesday at 14,075.37.
However, Preet Banerjee, finance columnist and the host of Million Dollar Neighbourhood, says this news doesn't mean you should throw all your money at the markets, especially not right now. He says you need to follow the golden rule - buy low and sell high to make money. He compares it to your weekly grocery shopping.
"Let's say that every week you buy a can of tuna and it's always a dollar and one week you show up at its only fifty cents for a can. You wouldn't stop buying tuna, you would probably double up on it," he said.
Banerjee went on to explain that many people who invest get fearful when the market takes a dip. They're afraid of losing more money, and have the tendency to sell at that time.
"But I'm actually wringing my hands in delight because it means that I'm going to have more money when it comes to my retirement, because I'm getting the lower initial buying price," he said.
He pointed to the credit crisis back in 2007 and 2008 saying it was a situation that scared a lot of people into selling their stocks. Those who held out are doing well now.
"If you just sat on your hands and resisted the temptation, you actually have made money," he said, "even if you put your money into the stock market the day before the crash started and it took years before we got out of it."
Banerjee said if the news of the DOW's closure has you excited to invest, grab a financial planner so you can get an idea of what would be a good investment option for the amount of money you have to tuck away and for the length of time you want to invest.
"When you're just starting out, it's just about doing it... and starting that monthly contribution," he said.
"To be an investor... you must be a saver."
Edited by CJME's Courtney Mintenko.