A steadier way to invest over time
Investing monthly, rather than paying in occasional lump sums, can help smooth the ups and downs of the market.
Here’s how it works.
Markets naturally move up and down
That’s a normal part of investing.
When you pay into your ISA, you buy shares at the amount they’re worth on that day. When the value changes, you either make or lose money.
So if you pay a large amount into your account all at once, everything depends on what’s happening in the market at that exact moment and immediately after.
Investing monthly spreads things out
By investing smaller amounts regularly:
- Sometimes you invest when prices are higher
- Sometimes when they’re lower
- Over time, this can help balance things out.
This approach is called pound-cost averaging, and you can adopt it simply by setting up a Direct Debit.
A simple way to picture it
Imagine paying £50 into your account each month.
Some months it buys more stocks and shares.
Some months it buys less.
But instead of being impacted by one single moment, you’re “smoothing” your investment over time.
The easiest way to do this? A Direct Debit
Setting up a Direct Debit makes it easy to stay consistent:
Even small, regular contributions can add up over time, especially when you stay invested for the long term.
Log into your account to set up a Direct Debit in minutes:
A quick note
Investments can go down as well as up, so you could get back less than you put in if you withdraw when the value is lower. Many people choose to pay in regularly as a way to take a longer-term, more balanced approach.
This article aims to explain your options and shouldn’t be seen as financial advice.
