Over a period of a few years, pound cost averaging
means the average price paid can be lower than the average share price for that period, since more shares are bought when prices are low and fewer when prices are high.
Every cloud has a silver lining If you're making regular contributions to your pension plan and are investing in the stock markets, then you may find that you benefit from the volatility in the markets by what is known as "pound cost averaging
"Not only does it ease cash flow, it also allows savers to take advantage of pound cost averaging
," says Dowding.
The effect of this is known as pound cost averaging
. It also has the benefit of reducing your risk, when compared with just investing a lump sum.
Investing on a monthly basis may average out ups and downs in the stockmarket - "pound cost averaging
There is a common phrase in the investment industry known as 'pound cost averaging
By regularly paying into an ISA you can take into account the ups and downs of the stock market and this can be a good way to invest; it's commonly known as pound cost averaging
and can be very advantageous as the volatility of the stock market allows you to benefit.
Lowes Wealth Management (LWM), the Beijing-based fund manager which runs the recently launched Elite East-West Value Fund, said it is beginning to move back into the markets, reducing its cash holdings and adopting a combination of derivatives and pound cost averaging
investment strategy to ride the bear market.
This has the advantage of pound cost averaging
, which means that you benefit from fluctuating prices, so have more chance of making gains.
The very nature of the plan makes it a medium to long-term investment - normally at least seven-and-a-half if not ten years so the pound cost averaging
benefits along-side the period of investment may lend this type of plan to an equity based fund for many.
Monthly savings schemes benefit from pound cost averaging
- which means that the variable highs and lows of the share price are smoothed out over time.
Over the years, the most successful investors have spent time drip feeding their funds into the market, to capture its high points and low points, in a process known as pound cost averaging
. The key point about pound cost averaging
is that you invest on a regular basis.