This investing strategy is 'extremely effective,' even when markets are volatile, CFP says

"Everyone has a plan," boxer Mike Tyson once said, "until they get punched in the mouth."

Lately, it seems, investors have been dodging all the blows. News of President Donald Trump's tariff rollout in April almost sent the market into bear territory. The President has publicly feuded with the chair of the Federal Reserve over interest rates. Inflation has remained stickier than expected.

Still, the S&P 500 has climbed more than 8% since the start of the year.

Eventually, though, stocks will tumble, potentially spooking investors. And amid market downturns, investors who had planned to buy and hold over the long term may panic and sell to avoid further losses.

That's why it's wise to know exactly what you'll do the next time markets get rough, says David McInnis, a certified financial planner and managing partner at Aristia Wealth Management.

"The great equalizer to market volatility is dollar-cost averaging," he recently told CNBC Make It, referring to a strategy in which investors put a set amount of money into markets at consistent intervals. This could mean setting up automatic contributions to a brokerage account or investing in your 401(k) via payroll deduction.

"Maybe it's not new and innovative," McInnis says. "But it is extremely effective."

Think about how you might invest when the market is roaring versus when a time when prices are falling and financial headlines are calling for doom.

Ideally, you'd buy more when stocks are cheap and less when they're expensive. But many investors aren't wired that way, said Kelly LaVigne, vice president of consumer insights at Allianz Life.

"When the market is doing well, people are throwing their money at it. When it's doing poorly, they're keeping their money out," he previously told Make It. "It's doing the exact opposite of what you're supposed to be doing."

With dollar-cost averaging, investing a set amount at regular intervals — ideally automatically — allows you to ignore short-term noise in the market and virtually guarantees that you buy more shares when stock prices are low and fewer when they're high.

"The habit of continually investing is a good discipline, and you can benefit from those times when the market is down," says Roger Young, thought leadership director at T. Rowe Price.

That's because, historically, the market has bounced back — and quickly — after things have gotten hairy. The S&P 500 has entered bear territory, defined as a drop of 20% or more, 27 times since 1928, according to data from Hartford Funds. It's taken the market an average of just under 10 months to turn things around.

In short, dollar-cost averaging ensures that you buy stocks in all environments, including when they go on temporary sale. For young people, that's an invaluable tool for building wealth, says McInnis.

"I wish I could go back to my younger self and listen to that advice in my 20s and early 30s, and to really not concern myself with the ups and downs of markets," he says. "Especially when there is extraordinary downside volatility, that's the best time to continue to push money into markets."

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