Regular investment smoothes stock market

25 August 2004
Consumers are being advised that regular investments will help to ride stock market lows as well as the highs.

The Association of Investment Trust Companies (AITC) has announced that even in uncertain markets savers should continue to invest in order to smooth out the up and downs in the price of shares.

"When markets are uncertain it's very difficult to take an investment decision and seems much easier to delay," says Annabel Brodie-Smith, communications director, Association of Investment Trust Companies (AITC).

To illustrate its point, the AITC gives the example that an investment of £50 per month in the average investment trust over the last three years of volatile markets, (a total investment of £1,800) would have increased to £1,978.

However, a lump sum investment of £1,800 in the average investment trust made three years ago would have decreased to £1,572.

Whilst over the longer-term lump sum investments on average have outperformed regular investments, investors who drip-feed their investment on a regular basis tend to have a lower risk profile.

Ms Brodie-Smith continued: "It's also hard to know when it's the right time to invest a lump sum and this is why regular investing can be a sensible option. Regular investing can help smooth out the highs and lows of share prices and removes the worry of investing at the right time."

She concluded by pointing out that by investing in a variety of companies from a variety of sectors and risk profiles the risk can be easily spread around.
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