The 4-cycle investment approach
Especially for new investors, the 4-cycle investment approach can help to avoid temporary and seasonal fluctuations of capital markets. Rather than investing the entire sum at once, the investor splits the sum into 4 equal parts (25% each) that are individually being invested each 3 months over the course of one year.
Example: Total investment 10.000 EUR
1 January: 2.500 EUR
1 April: 2.500 EUR
1 July: 2.500 EUR
1 October: 2.500 EUR
When I first invested in ETFs, I followed the ETF stock price for a few weeks and couldn’t decide when to start investing being afraid that the stock price would go down the next day, the next week, the next month. I read about the 4-cycle approach and used it myself (see my investment history). Not only did it give me the confidence that I am not a victim of short-term or seasonal stock fluctuations, it also helped me starting to invest. The first step is always the hardest and the 4-cycle approach helped me getting started.