Suze Orman: This Is the Only Way To Approach Investing in the Stock Market
Written by
David Nadelle
Edited by
Gary Dudak
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Given her no-nonsense approach to building wealth, it’s not surprising that financial guru, Emmy-winning TV host and popular podcaster Suze Orman recommends certain risk-averse investments to her legion of followers.
Orman is a firm believer in establishing a solid financial foundation, growing an emergency fund, paying off high-interest debt and saving for the long-term before jumping into the investment game. Then, when you are finally in a position to invest, she suggests diversifying your portfolio so you maximize the chance of making money and minimize the risk of losing it.
What Orman Recommends
Over the past few years, Orman has been bullish on U.S. Treasury Series I bonds and certificates of deposit (CDs) when the stock market has been flagging and inflation is sky high. However, the author of “9 Steps to Financial Freedom” recently spoke of what she thinks is the best way to invest in the stock market.
“I’ve told you over and over again,” Orman said on her April 21, 2024, “Suze School” podcast. “The only way to be investing in the stock market is through dollar-cost averaging, where every month, or every three months, or every six months … if there is something that you own and it goes down, you buy a little more. If it continues to go down, you buy a little more.”
How It Works
In dollar-cost averaging, the investor only has to decide two things: the fixed amount available for you to invest and how often you want to invest. Once you’re settled on these two parameters, you can set up automatic investing — a payroll deduction or scheduled bank transfer — through your favorite investing app.
“You decide on a specific amount of money,” Orman explained on an earlier podcast episode. “Maybe it’s $1,000 maybe it’s $10,000 or $12,000 or $100,000 that you want to invest in the stock market. You then divide that amount of money by 12 or 24 to decide, ‘Do you want to invest it all within a year’s period of time or two year period of time?’ or whatever length you want, no less than one year.”
She continued, “You dollar-cost average in the hopes that if the market goes down, your dollars average the price of what you’re buying. So therefore you buy more shares. When the market goes down for that amount of money, you buy less shares when the market is going up for that exact same amount of money. But in the long run, you have averaged the cost of what you’re investing in over time with your dollars.”
Orman stressed the importance of practicing dollar-cost averaging on a mix of exchange-traded funds (EFTs) and mutual funds, assets that fall between in the sweet spot between returns and risk.
One of the most popular financial and motivational personalities in America, Orman has an estimated her net worth of around $75 million. Her wealth comes from a number of branded incomes like running her own Suze Orman Financial Group firm for a decade, hosting the top-ranked “Suze Orman Show” on CNBC from 2002 to 2015, authoring a number of bestselling books and much more.
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