Monthly Investing

Monthly Investing

Monthly investing can be a great way to invest in the stock market, without putting all your capital at risk in one go. Here are the advantages:

1) It can give you peace of mind. Rather than making a big initial lump sum investment and worrying when the market drops, we are almost happy when the market falls so we can get a better price for when we make our next purchase. If the market does rise, we don't feel too bad either, as we have still made money on our investment – this is known as pound cost averaging.

2) Putting a little bit of money aside each month is also a great discipline to have and could make an enormous difference to your long-term finances. Investors need to be careful they don't get hit by extra fees which can be levied when investing monthly. Many providers take advantage of customers by adding on extra costs for monthly investing, to the point where it is no longer worth while. At Chelsea we don't charge you anything extra and we also have very low minimum investment amounts, meaning you can start a monthly saving from as little as £50 a month.

3) It takes all emotion or decision making out of the investment process. Many investors suffer poor returns in the stock market because they have bad timing. Because of human nature, people tend to invest near the top of the market when the outlook appears safe, and they sell near the bottom when the market is volatile and scary. This benefit should not be underestimated as very few investors, even hardened professionals, can successfully predict the direction of the market in the short term, despite what they might say.