Dollar-Cost Averaging In A Bear Market

In March 2020, international markets nose-dived due to the COVID-19 pandemic’s economic impacts. At that time, I had been an attending physician for only six months. I decided to make a significant, one-time investment in low-expense-ratio index funds, knowing the market would eventually grow and I would compound over time. Fortunately, this bear market was relatively short-lived, and my investment was worthwhile.

With the current bear market in 2022, I’ve increased my dollar-cost averaging investment strategy from monthly to weekly investments. The idea is that instead of guessing when the market will be at a low, I’m investing each week and letting the law of averages prevail.

Fidelity makes this process easy through a scheduled transfer from my Chase Sapphire checking account to my Fidelity brokerage account every Monday. Adjusting how much I transfer is easy as my financial needs and the market landscape change.

Unfortunately, automated investments are only limited to mutual funds. I’m trying to stick to exchange-traded funds (ETFs) in my taxable brokerage account. Therefore, each scheduled transfer ends up in my core position, which I invest in Vanguard Total Stock Market ETF (VTI) and Vanguard Total International Stock ETF (VXUS).

Drop me a comment below with questions!

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