The Benefits Of Regular Investment

Plumping for an index tracker takes a lot of the worry and stress out of investing. But you may still be concerned that you might invest at the wrong time, for example when the market hits a temporary peak. The trouble is that you never know what the stock market will do next. Many column inches are devoted to predicting the short-term direction of the market but it is all just pure speculation. No one knows which direction the market is heading but everyone has an opinion. The best thing to do is ignore it.

The key fact in our opinion is that the long-term direction of the market is upwards. You can't time your entry to perfection; the most important thing is taking part. There's an old investment saying – it's time not timing. You are never going to buy at the very bottom and sell at the top, not unless you are extremely fortunate. Think of investing as a marathon. The key thing is to finish; the secondary consideration is your performance. It's no good going sprinting off only to collapse in a heap two miles later.

An excellent way of pacing your investments is by regular investment of say £25, £50 or £100 a month into an index tracker. Or even more if you like. Every fund has a regular savings scheme set up these days. Usually the costs are extremely low. Setting up a regular investment is also a good discipline meaning that you effectively force yourself to invest every month. It's a good habit to get into.

Likewise, when you cash in your investment the reverse strategy makes sense. Rather than taking your money out in one go you can sell gradually. Of course you may decide that shares are the best place for your money in perpetuity and that you intend to live off the dividends and let your capital grow further.