What is regular investing?

How does regular investing work?

Setting up regular investments is a great way to automate your investing journey and take the day-to-day hassle out of it. It means you can get on with the more important things, all while your investments are building up in the background.

Our regular investment service lets you save as little as £25 a month into the investments of your choice. You set it up by selecting the investments you want to buy and telling us how much to invest in them each month, then you’re all sorted for every month to come.

Just make sure you’ve enough cash in your account ready for your regular investment day (on or just after the 10th of the month). A good way to do this is by setting up a direct debit from your bank account. This should arrive in your AJ Bell account at the beginning of each month, with enough cash to cover your upcoming regular investments and charges.

What are the benefits of regular investing?

Little and often

Many people believe the myth that you need a huge stash of cash to start investing. The truth is you can invest with as little as £25 a month and build up your investments over many years.

Besides the obvious financial barrier to investing a big lump sum in one go, when starting out investing, doing it all at once can feel quite scary. So, taking it a month at a time, and smaller amounts at a time, can be a great way to ease yourself in. It may also mean you can get started investing sooner than you think.

Automation

A big benefit of regular investing is not having to worry about remembering to invest each month. Often, we intend to fund our investment account but forget to do it, meaning that we invest in fits and starts. But with regular investing you will invest the same amount each month without having to remind yourself.

Lower charges

With our regular investment service, you get a discounted dealing charge – meaning whatever investment you pick it will only cost you £1.50 to buy every month. You can pick from a huge range of regular investments, from popular shares, funds, investment trusts and ETFs. And considering buying shares, investment trusts and ETFs can cost up to £5.00, automating any regular investments you’re planning could lead to big savings.

Timing

Perhaps the biggest win of regular investing is avoiding trying to time the market. Lots of people might sit on the side-lines waiting to pinpoint when to invest in the stock market. But history has shown it’s very hard to time the market accurately (even the professionals struggle to do this!). It means that often investors miss out on market gains because they’re waiting for the ideal time to invest.

With regular investing, you’ll have a structure you can stick to, which could prove especially helpful when keeping impulses in check around dips and peaks in the market. Remember the old investment adage: “time in the market beats timing the market”.

Pound-cost averaging

Data shows that drip-feeding money into investments regularly can, on average, benefit your returns over the long term. It’s a strategy known as ‘pound-cost averaging’. Essentially it means that because you’re buying at different times, when markets may have risen or fallen, you’ll end up smoothing out the ups and downs of the market over time and lowering the risk of your portfolio.