Monthly investing

Investing is not just for those with large sums of money. By contributing little and often, you’d be surprised how quickly your investments can grow over time

A monthly investment plan can be a good way to maintain a long-term investment strategy and is a sensible way of being disciplined about saving for the future. It is a useful facility for those who do not have the full ISA allowance available to invest in one go, or those who prefer to drip feed their investment over time.

You can choose to invest in Funds, Shares, Investment Trusts and ETFs. It is possible to set up a Direct Debit from just £25 a month, making regular savings a popular and affordable way of building your investment portfolio.

Long-term growth potential

The example below shows how much your investment would be worth if you invest with Willis Owen in a Fund with no initial charge and an Annual Management Charge of 1.15% and if that Fund grows by 6% per annum.

Monthly Chart
These figures are for illustration purposes only. The growth rate is not guaranteed and you may get back less than you invested.

Pound Cost Averaging

Every investor knows to buy low and sell high but timing the market correctly is something that even the most experienced investor struggles to do. With a regular investment, you no longer have this worry, due to what is known as ‘Pound Cost Averaging’. Pound cost averaging is where the effect of changes in market prices on the value of your investment is effectively smoothed out. It is during periods of volatility that Pound Cost Averaging comes into its own – not only can regular investing smooth out the volatility in your Fund price fluctuations, you may actually be in a position to make a greater profit than a lump sum investor as this example shows.

Example based on £2,000 invested as a lump sum or £400 monthly

Date
Unit Price
No. of Units
Purchased
(Lump Sum)
No. of Units
Purchased
(Monthly)
January
100p
2,000
400
February
140p
-
286
March
75p
-
533
April
100p
-
400
May
90p
-
444
Total number of units 2,000 2,063
Average price for a Fund unit for the regular investor is 97p.

Don’t forget whether investing monthly or with a lump sum, the sooner you start to invest, the more potential your Funds can grow.


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