The Benefits Of Regular Investment
We think using an index tracker can take a lot of the worry and stress out of investing. However, you may still be concerned that you might invest at the wrong time.
Tune out the noise
One problem with investing 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 although that doesn’t seem to stop everyone having an opinion (unfortunately).
The best thing to do is ignore all this noise, which we appreciate is easier said than done.
The key thing to appreciate, 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 that’s worth mentioning here — it’s about ‘time in the market’ not ‘timing the market’. Clever, eh?
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. Pretty much 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.
Brokers like The Motley Fool Share Dealing service also make it very easy to set up regular investments into individual shares, which cost just a fraction of the price of a normal trade. (Motley Fool Share Dealing is an execution-only service and does not give investment advice. And of course, investing is not without risk: share prices go down as well as up and you may get back less than you invest.)
Likewise, when you finally cash in your investment, the reverse of this strategy makes sense. Rather than taking your money out in one go, you can sell gradually. Of course, you may decide that the stock market is the best place for your money in perpetuity and that you intend to live off the dividends and let your capital grow further.
Free investing reports
The Motley Fool can help you invest better. We have several investing reports which are free to access and packed full of useful information on investing strategies and share ideas.