Regular Savings Plans
How to make the market work for you
So, with some smart, strategic investing, it is possible to avoid the worst of any turmoil in the stock market and make it work for you. If prices fall, your fixed monthly investment buys more units or shares. Of course, if prices rise, you buy less. However, thanks to a statistical wrinkle known as pound-cost averaging, over any given time period your average purchase price per unit or share will actually be lower than the average market price. Regular saving in this way helps to smooth out the peaks and troughs of market fluctuations, and their potential negative impact on your portfolio.
Pooled funds offer smaller investors greater diversification. They will invest in anything from 30 to 150 companies at one time. This reduces the risk that, if one company goes bust, it will dramatically affect the performance of the fund.
There are literally thousands of different funds available to cater for investors varying objectives. To maximise your geographical diversification you may want to consider a global fund. These give you exposure to every market in the world, with the fund manager making decisions about where you should invest. It can also be worth spreading your investment across different asset classes too.
Funds of funds are also worth considering because these invest in other funds rather than directly into companies. The fund manager will monitor the individual funds and when one starts to under-perform they will consider selling it and replacing it with another one.
Introduction
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