Nearly a year ago, on March 26 of 2009, we published a post entitled "Paying Yourself First," in which we reiterated the importance of establishing a systematic mechanism for adding capital into savings on a regular basis.
Market corrections make systematic investments all the more powerful. For instance, since the date of that blog post, the broad market represented by the companies in the S&P 500 index has increased in price by over 34%.
We noted in that post our experience that "this is an area in which investors -- even very wealthy investors -- often have good intentions but haphazard execution."
In light of this fact, we believe it is important to remind investors of the importance of this practice of regularly watering their crops, so to speak.
The market correction that is taking place right now (which take place regularly and which are a necessary function of markets) is an excellent time to remember this point. However, we would also point out that investors should not wait for corrections, at least not with all of their contribution. It is important to have a regular amount which goes into investments using dollar-cost-averaging, although holding back a portion (50% or less) of the monthly or quarterly contribution to add during pullbacks is a strategy that we endorse.
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