The Magic Recipe to protect you against Bear Market

Author: Thiru

2022 was one of the worst years for the stock market, with S&P 500 down by almost 15% and the tech-heavy Nasdaq down 27% YTD.

SPX YTD

NASDAQ YTD

Most investors like ourselves would be afraid of this bear market and would refrain from investing in the stock market.

But what if you find out that there is a magic recipe that will protect you from huge losses and can still make you profits in this bear market? The magic recipe is none other than Dollar Cost Averaging.

Dollar Cost Averaging is a simple technique of investing a fixed amount at regular intervals. Then you don’t have to worry whether the market is up or down. You buy more when the market is down, and less when the market is up. In the end, it gets averaged out.

In 2022, if you had invested $1,000 every month in an S&P 500 ETF like VOO on the last day of every month, you would have still made 0.1% profit when the entire market is down by 15%.

Still not convinced? Here’s exactly how this would have played out this year:

Stay invested, and don't get carried away by the market sentiments. Time in the market is the key. Investing $1,000 in S&P 500 fund like VOO, SPY or FXAIX today is likely to become $17,000 in 30 years!

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