Whether you’re worried about stock markets or the economic environment, are new to investing, or don't have a lot of spare cash, investing a lump sum can be daunting. After all, no one wants to invest a large amount of money, only to see it fall in value the next day.
If this sounds like you, taking a 'little but often' approach could be the solution.
There are a number of potential benefits associated with regular monthly savings:
I hate to mention the 'B' word, but the ongoing Brexit shenanigans are an excellent example of how monthly savings into a UK equity fund could be an option if the uncertainty has put you off investing recently.
FP CRUX UK Special Situations is a newly launched fund that you may like to consider. While the fund is only six months old, the manager, Richard Penny, is well-known to many Chelsea investors as he previously ran the L&G UK Special Situations and L&G UK Alpha funds. More details can be found on page 28 of our October 2018 Viewpoint magazine.
Monthly savings tend to work well in the riskier markets of Asia and Emerging Markets – due to the effect of pound cost averaging mentioned above.
Fidelity Asia Pacific Opportunities and Lazard Emerging Markets, which are on the Chelsea Selection, are worth a look. Both regions have suffered in the past few years as the US dollar has been strong and President Trump has been threatening a trade war with China. However, some commentators believe the Greenback has now peaked and the trade war could be avoided. More information on the Fidelity fund can be found on page 27 of our March 2018 Viewpoint magazine.
Talking of America, the US stock market has enjoyed a decade of rises. Having fallen along with other global markets just before Christmas, the Dow Jones Industrial Index and S&P 500 index are now back close to their all-time highs. If you like the US, but don't know how long the good times will last, you could try monthly savings here too.
One of Chelsea's long-time favourite US equity funds is AXA Framlington American Growth. Managed by Steve Kelly, it has been on the Chelsea Core Selection for a number of years. Steve looks for innovative companies that have unique brands and intellectual property giving the business competitive advantages and helping them to grow into market leaders.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Darius's views are his own and do not constitute financial advice.