Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
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.
3.
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.
4.
If you have new money to invest and you want to invest in a volatile fund, a wise advisor would most likely say _______.
Invest a little at a time. Discipline pays with volatile funds, so unless you can guarantee that you won't give in to the temptation to sell when the fund stalls, it might be better to ease into it by dollar-cost averaging.
5.
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.
