Life Annuity

Is it best to invest a lump sum once a year or in monthly installments?

 If you always knew the best time to put your money in the market, you would be well on your way to joining Bill Gates and Warren Buffett on a list of the world's richest people. Of course, no one "nope, not even Mr. Buffett" can predict the market's future with total accuracy, says Christine Benz, a Chicago-based director of personal finance for the investment research firm Morningstar. That's why most financial pros are proponents of stashing money in the stock market on a regular basis - a practice that is called dollar-cost averaging.

Here's how it works: You invest a set sum "say, $100" each month for 12 months rather than plunking down $1,200 all at once. In the process, you spread your risk out across the entire year. As long as you invest the same amount every time, you should be fine. You'll usually end up buying more shares when the market slumps and fewer shares when prices are high. So you will be protected from huge ups and downs in the market. What's more, investing on a schedule makes it easier to be disciplined about setting money aside. Keep making regular deposits and you'll find your financial goals are closer than you think.

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