The stock market isn’t always a smooth ride but investing regularly each month allows you to build up your investments and can help to smooth out fluctuations in share prices over time.
For example, let’s say you have £1,200 to invest. We’ll compare buying £1,200 worth of ABC company shares in January against investing £100 per month over the whole year:
Date |
ABC Company share price |
Number of shares purchased (Bulk) |
Number of shares purchased (regular investment) |
Jan - Mar |
200p |
600 |
150 |
Apr - Jun |
225p |
|
132 |
Jul - Sep |
200p |
|
150 |
Oct - Dec |
150p |
|
198 |
Total |
|
600 |
630 |
As you can see in this example, although there are share price fluctuations, investing regularly has helped to smooth them out because you buy more shares when the price is low and fewer when the price is high. Please note that this is only an example and the share price may not always work to your advantage.