WORDHOUSE WEALTH COACHING
When you make a deposit into your mutual fund, your money buys more shares of your mutual fund at the market’s ending value for that day. If at the end of the next day the value goes down, you still own the same number of shares but they now are worth less. When you again deposit the same amount of money into your mutual fund, while the market is still down, you buy more shares than you did at the higher price, as now they are purchased at a lower price. When the market goes up the value of the shares you bought for less will go up with your other shares, but you will have more shares appreciating to a higher value.
Example:
BUYING: Assume the first shares you purchased in your mutual fund cost $1.00 per share on Monday. Your deposited $10 will purchase 10 shares of the mutual fund (also sometimes shares are called units).
On Wednesday you have another $10 to deposit and the market has gone down, as the shares in the mutual fund now have a value of $.50 per share. Your $10 deposit will now buy 20 shares, double what you purchased on Monday.
You now own a total of 30 shares, so when the market goes back up, and it will, your mutual fund will appreciate more than if you didn’t buy more at the depressed price, as you have more shares to go up with the market!
Do you love sales? Would you rather buy shares at $.50…or wait until the shares go back to $1?
SELLING: Would you rather sell your shares for $.50 or $1? Selling at a higher price than you bought them for is one of our investment rules (Buy Low, Sell High)! This happens when Matrix quarterly rebalances your accounts, by selling off the excess gain over each asset target amount and applying it to the asset classes below target.
MAINTAINING: If you are unable to add to your Matrix accounts, you own the same number of shares as you did a year ago, but the share value is (temporarily) less. History shows us that the market has always recovered, typically higher than ever before! Just stay true to the MPT (Modern Portfolio Theory) strategy!
Investors who continually add to their investments will come out the real winners! Just keep focusing long term and keeping your money in the market!
Phone: 616-301-9049 · Fax: 888-797-8703
Wealth Coaching provided through Wealth Advisors Group, LLC.
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