If you're scared, say you're scared!

Every one has the same pipe dream when it comes to investing.

You time the market perfectly, waiting for the absolute low on the DOW and you drop your entire nut in tech. In one week, you’re up 390%. It couldn’t be easier right?

Well in the real world the stock market kicks your butt, especially if you think you’re smarter than it. So what should you do? You know you should be investing, you’ve read all the articles, watched Cramer on CNBC, talked to friends, joined marketwatch.com and you still haven’t invested a single dollar.

What’s the problem?

Let me help you out.

If you’re scared, just say you’re scared.

You can lose money and predicting market highs and lows is a feat no one has ever fully mastered, despite the claims by some that they have just the right strategy that enables them to buy and sell at the most opportune times.

They may be selling but we ain't buying.

Predicting which direction the market will go or investing based on your lucky high school jersey can get you in trouble, or at the very least may cause you a great deal of frustration. One strategy that may help you avoid these investing pitfalls is dollar-cost averaging.

Dollar-cost averaging involves investing a set amount of money in one investment type (like a stock, ETF or mutual fund) at regular time frame for an extended period, regardless of the price.
I’ll say it again, REGARDLESS OF PRICE!

Let’s say you have $6,000 to invest. Instead of investing it all at once, you decide to use a dollar-cost averaging strategy and contribute $500 each month, regardless of share price, until your money is completely invested. You’d end up purchasing more shares when prices are low and fewer shares when prices are high.

For example, you might end up buying 20 shares when the price is low, but only 10 when the price is higher.

This strategy has the potential to reduce the risk (my favorite four letter word) of investing a large amount in a single investment when the cost per share is higher. It also helps protect “scaredy cat” investors who sell too soon when markets pull back drastically, potentially causing a huge loss.

The average cost per share may also be reduced, which has the possibility to help you gain better overall profits from the market.

The bottom line is that the average share price has the potential to be higher than your average share cost. This occurs because you purchased fewer shares when the stock was priced high and more shares when the price was low.

Dollar-cost averaging can also help you to avoid the stress of always monitoring the market in an attempt to buy and sell at the perfect moment.

Dollar-cost averaging is a long-range plan, which I preach over, and over and over. It’s all about the average.

But it works the best when you’ve stuck with it for a while, despite any nerve-racking swings in the market.

Remember, in the stock market you’re nothing without a plan. When other “scared of their own shadow” investors are scrambling to get out of the market because its dropping like a rock and think they can pick a time when it makes a comeback (genius), you’ll keep investing.

You my friend will have changed your mindset to investing and will see opportunity when the rest of your buddies will try to make up the lost in their portfolio at the casino.