Fairy tales and timing the market

I loved fairy tales when I was young. They always conveyed a gentle lesson through the power of story-telling--and who doesn't love a good story?

Fairy tales often came in 3 parts: a myth that ends up getting busted (like princesses can't take care of themselves), some magic that might involve effort or a new way of thinking (the princess steps out of her traditional role and saves her people), and a moral (things aren't always what they seem.)

So how does this relate to investing and building financial security? Let's look at one of the biggest challenges people have--when is a good time to invest?

Here's one fairy tale about timing and steadiness.

Fairy Tale: The tortoise and the hare

In the fable, the tortoise and a hare (rabbit) made a bet on which one would get to a finish line fastest. 

The hare was cocky because he knew he was 10 times faster. Both started the race at the same time. The tortoise plodded along, slowly but steadily putting one foot in front of the other and not stopping. 

The hare, on the other hand, raced ahead, leading by a wide margin, then stopping to indulge in breaks, since he figured he could always make up the difference later. On one of these breaks, he fell into a nap. The steady tortoise finally passed him dozing under a bush, and crossed the finish line first to win the race. 

What 3 elements here can be related to your "journey" towards financial security?

Myth: Believing investments are safer to buy only when they show current strong performance is the way to profit. 

Magic: Buying small, regular amounts of investments no matter what the market is doing can pay off. The technique of "Dollar-cost averaging" buys more shares when the price is lower and fewer shares when it’s higher. Over the long term, it’s a truer, more secure and steady way to build wealth.

Moral: It’s what you do on a steady, regular basis that determines your long term financial success. Remember, it's the time you spend in the market, rather than timing the market that counts.

Don’t assume everyone else is always faster/better/smarter with their money. And don’t give up before you’ve even begun. Steady investing, even of small sums, can lead to long-term rewards. Reminder--the race can’t be won until you start.

How dollar cost averaging works--Wikipedia link. What's your biggest challenge when it comes to reaching your investing "finish line?"