Blog: The beauty of regular investing
Say you currently don’t invest at all. You’ve always thought investing was for people with lots of money, people who have skills you don’t have or people who love a ‘bet’ on the stock market. You are, however, slightly intrigued because you’re not getting a very good return on cash and would like to start building for your future knowing your money is working hard for you.
The main things you’re probably worried about are the costs involved, that you’ll pick the wrong stock, or that there will be a sudden fall in financial markets straight after you decide to invest.
Well, wouldn’t it be a thing of beauty if you could mitigate the worries above while still providing yourself with the potential to achieve solid investment returns?
You’ll probably be surprised to hear that you can achieve this through an incredibly simply practice, investing regularly into a well-diversified actively managed investment fund.
I want to give you a graphical example of this by using one of Strawberry’s investment ideas for the first timer.
The graph below shows the Total Return that would have been achieved if someone had invested £100 every month into the Invesco Perpetual Distribution Acc Fund from December 2004 to the end of November 2014. It assumes an initial £100 is invested so a total of £12,000.00 has been placed into the fund over the period.
By the end of November 2014 the value of investment stands at £18,149.03, giving a return of circa 51.2% based on the total amount invested. This is equivalent to an 8.02 per cent annual rate of return on your regular investment. Furthermore, the largest fall in value over the period was only circa 13.8 per cent (between 29/08/2008 and 31/10/2008 (where the value fell from £4,749.74 down to £4,096.27). This was at the start of the financial crises when the UK main market fell by 22.1 per cent!
It can control volatility (the rise and fall in value from period-to-period) over the long-term by avoiding investing all of your money when valuations are high, whilst enabling you to buy in when valuation are low. This will ensure that you build your investment portfolio in a controlled manner.
The fund I have illustrated is a multi-asset fund that is actively invested by the fund manager. This means that an investment expert is buying and selling the underlying investments, deciding not only which companies to own but also where in the world you should be investing and the types of investments that you should be holding.
All you have to do is set up a standing order.