Have you started using Raiz but noticed that your account balance has gone down? In this post I’m going to explain what’s going on and what you should do.
What you’re investing in
When you invest using Raiz, your money is invested in a diverse portfolio of stocks and bonds. So it’s important to understand that the stock market does go up and down. So if you’ve invested right before the market has a downturn then your account balance on raiz will go down a little bit.
Long Term Investing
The most important thing to remember when investing with Raiz, is that you’re not investing to get rich overnight. Raiz works best in the long term. While it can be a bit annoying to see your Raiz account balance to go down a bit, it’s important to remember that this is not unusual. Markets do recover and stocks regain value.
The portfolio you’ve chosen to invest in will also affect how much your account balance moves around. For example, the aggressive portfolio will prove move up and down much more than a conservative portfolio. But don’t worry, this is how it was designed.
Dollar Cost Averaging
Raiz works so well in the long term due to something known as Dollar Cost Averaging. DCA works by investing small amounts at regular periods. Sometimes your money will be invested when the stock market is low, and sometimes when it is higher. And overtime, this averages out. So when the markets grow in value (which they have over the past few decades), your investment grows too.
Don’t Panic Sell
The worst thing you can possibly do is panic sell. If you close out your position on Raiz after seeing your account value drop, you’ll lose. Period. If you hold onto your investment, then with time you’ll see your balance recover and grow.
So in conclusion, remember that the stock market goes up and down, so it’s normal to see your account balance move around a bit. Over time, it will grow and recover. Just don’t be the fool who panic sells and loses money.