Choose wisely. There is only one correct answer to each question.
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1.
Fickle investors sabotage their investment returns by _______.
Buying funds when they are hot and selling them when they turn cold. Fickle investors buy what's hot and sell what's not. Dollar-cost-averaging investors invest a little at a time.
2.
If you are an average investor but want to invest in a volatile fund, a safe and wise idea is to do it through dollar cost averaging.
True. Investing a little at a time like this can help you keep your head and even do well.
3.
Which fund types often treat fickle investors the worst?
Sector- and region-specific funds. Investors suffer most with volatile sector and regional funds, in which volatility and temptation are highest.
4.
If you are afraid of becoming a fickle investor, you should _______.
Dollar-cost average into funds. Investing a little at a time by setting up a regular dollar-cost-averaging program will prevent you from becoming a fickle investor.
5.
For the average investor, an alternative to chasing funds for the next big performer is to do regular _______ of your portfolio.
Rebalancing. With rebalancing, you can add or remove holdings based on how they perform. That is an alternative to chasing after the latest hot funds.
