Take Advantage of Pound Cost Averaging

Investing little amounts regularly can have the advantage of averaging out the cost of your total investment over time. This is called 'Pound Cost Averaging'.

If you invest the same amount of money each month, when the share price is down you get more for your money than you will when the share price is up. This technique irons out the ups and downs of a share or fund price over time, giving you a number of shares bought at an overall average price. This takes away the worry of timing your purchases correctly.

Regular investing is ideal for people starting out or who want to take their first steps towards building a portfolio of funds for their long-term future, and who want to take advantage of very low commissions.

Pound Cost Averaging Example

MonthShare Price  Regular InvestmentShares Purchased One off InvestmentShares Purchased
£5.00     £100  20   £500  100
2 £4.50 £100  22      
3 £3.50 £100  29
4   £4.00 £100  25
£5.00 £100  20
Average  £4.40 Totals      £500 116 £500  100
      Value of shares at month 5 £580 Value of shares at month 5 £500
Please note, this is for guidance only. Movements in the share price may mean you acquire less shares in the period resulting in a lower valuation.

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