The markets have continued to fluctuate significantly throughout the spring and summer of 2008. Overall, the market is down for the year to date, meaning that there are bargains to be had. I have continued to stay focused on our 20 year+ plan of dollar cost averaging into the global equity markets while adding a small bond position to reduce our families overall risk.
If military families have been staying on the sidelines waiting for the market to get more expensive, I think that it’s time to get in. If you cannot afford to risk short term reductions in your investment, or are likely to abandon your strategy if the market trends lower in the next 6-months, then you are probably not ready to start investing in stocks.
The foundation of a financial plan is stability (being up to date on all your bills and obligations), a buffer to absorb fluctuations (an emergency fund of 3-6 months of total expenses), and a reasonable budget that allows you to determine how much money you have to invest each month. If these steps are not taken care of first you’ll likely have to pull money from your investments before they have had time to grow.
BOTTOM LINE: If your “primary 3” building blocks are built, now is a great time to jump in and begin building your nest egg.
In my next post I’ll discuss a great fund to start with.