August 10, 2022

How to invest during a recession

In the common case, and depending on context, investing for the long run is an investor's best option. During a recession or down market this is especially important. Often, people attempt to move around their portfolio in times of a down market to "protect" their investments, but by the time they realize the market is going down they likely have already suffered large losses. It is best to have a long term investing strategy and to stick to it for the long run.

Financial investors often recommend investors trust that their investment strategy will work over the long-term. Choosing an investment strategy and maintaining it is the most difficult part. There is a lot of discipline that is required to maintain the course when you see red all over your portfolio. A big piece of choosing your strategy is ensuring that you are diversifying yourself enough, if you choose to diversify as part of your portfolio. Many investors invest in individual stocks or tokens and plan to hold them long term. While this has potential, it is often safest to invest in baskets. This will allow you to diversify into many tokens at once, maximizing your diversification.

Holding long term also allows investors to avoid attempting to time the market. A common strategy is dollar cost averaging. This means that a person will invest the same amount of money at common intervals over time. For example, instead of investing $100 in a lump sum single investment you might invest $10 per month for 10 months. This will average out your buy in price to something that is most likely lower than the price you would've bought into originally.

A good mixture of dollar cost averaging, investing for the long term, and diversification tends to be a great investing strategy touted by investment advisers. All of these strategies are available to users of the Coherence app by simply downloading the app.

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