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Celebrity financial adviser Suze Orman isn’t for everybody. She once told MarketWatch that “there are people that hate my guts. You don’t even want to know the things they say.”
But there’s no denying that her common sense brand of money management has resonated with her devoted fanbase over the years. Lately, with many in that fanbase struggling to navigate the coronavirus pandemic, she’s been hitting the media circuit to address just some of the issues.
During a CNN segment that aired on Saturday, Orman was asked by a viewer how to approach investing in the stock market in the face of the historic volatility.
Here’s her answer:
“ ‘Let’s just assume you have an eight-month emergency fund. Let’s assume you have no credit card debt. Let’s assume that you still have money coming in. You should be dollar-cost averaging every single month into the stock market.’ ”
In other words, she’s advising those without more-pressing obligations to take a specific sum of money and invest it every month into something like the Vanguard Total Market ETF VTI, -2.76% .
“If you do it month in and month out and you have at least three five or 10 years or longer until you need the money you will be happy,” she continued. “If you need money within a year it’s not money that belongs in the stock market. Take it out now.”
Back in late February, when the Dow Jones Industrial Average DJIA, -2.55% had dropped more than 1,000 in a single session on fears of what the coronavirus could do to the U.S. economy, Orman raised a few eyebrows when she said “I rejoice” in the face of such pullbacks.
She used the opportunity to again push her case for dollar-cost averaging.
“The higher the market goes, the shares cost more, the less shares their money buys, the less money they make, in the long run,” she told CNBC. “With this dip, if it continues to go down, they should just stay the course and actually be quite happy because the market is still incredibly high.”
One month and a brutal stretch of market losses later, the New York Times best-selling author returned to CNBC in late March to urge investors to stick with the plan.
“You will never, ever, know the bottom. You will never, ever, know the top,” she said. “Fortunes are going to be made out of this time. So just stay calm. I can guarantee you that if you stay in and you just stick with it, three years from now you will be very, very happy that you did.”
Here’s Orman talking financial stability in a recent appearance on the Tamron Hall Show:
Orman, of course, is not alone in pushing the time-tested dollar-cost averaging approach.
For instance, Kimberlee Orth, the Ameriprise private wealth adviser who was ranked No. 2 in the U.S. among her peers in 2019 by Barrons, recently urged investors to stick with the same plan.
“If you were already in the market on Feb. 1 or March 1 or April 1, and you watched the market go down and those resources are allocated to a long-term goal and your risk tolerance is still suitable,” she said, “there’s no need to change that because the market is eventually going to go back up.”
Stocks are still well below the record highs of earlier this year, but the blue chips are up about 28% from their March 23 low at 18.591.93, while both the S&P 500 index SPX, -2.80% the tech-heavy Nasdaq Composite COMP, -3.20% are similarly off their lows.
