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Regular investment v lump sum investment

20 May 2009 / by Rebecca Sargent
Lump sum investments could soon outperform regular investment plans, as the stock market begins to pick up, research from the Association of Investment Companies (AIC) has revealed.

According to the data, regular investment of monthly amounts has fared better than lump sum investments during volatile times. However, as markets begin to stabilise, lump sum investments could be making a come back.

April this year saw the investment company sector perform well, up 13.4 per cent compared to a 9.9 per cent increase in the FTSE All Share, and if markets sustain this, the AIC claims that lump sum investments will prove their worth over the longer term.

Commenting, Annabel Brodie-Smith, communications director at the AIC said: "The recent upturn in markets may well be tempting investors back to investment. Our research illustrates that over the longer term lump sum investments have outperformed regular investments as markets have generally risen over a long time-frame.

"If the market bottom has now been reached this could be the moment when lump sum investments begin to out perform regular investments," she said, but added that it's worth remembering that regular saving has outperformed lump sum investments in the recent difficult market conditions.

"Regular saving can help smooth out some of those stomach churning highs and lows in the price of shares which means that investors buy fewer shares when prices are high and more when prices are low, removing some of the risk of market timing," she added.

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