Monthly Savings Scheme
Did you know that even if you don’t have a lump sum to invest, you can still invest in an ISA?
With Willis Owen you can invest from as little as £50 a month in the fund of your choice and still benefit from the same large discounts.
Furthermore your regular investment can soon mount up and over the long term can grow to a sizeable sum. For example, if you invest with Willis Owen in a fund with no initial charge and annual management charge of 1.5% and that funds grows by 6% per annum, your investment could be worth:
| Monthly Investment | After 10 Years | After 20 Years | After 30 Years |
|---|
| £50 | £7,559 | £19,406 | £37,969 |
| £100 | £15,119 | £38,812 | £75,938 |
| £250 | £37,799 | £97,031 | £189,846 |
These figures are for illustration purposes only. The growth rate is not guaranteed and you may get back less than you invested.
There are other benefits of regular investment too:
Every investor knows to buy low and sell high but timing the market correctly is something that even the most experienced investor struggles to do. With a regular investment, you no longer have this worry, due to what is known as ‘pound cost averaging’.
Pound cost averaging is where the effect of changes in market prices on the value of your investment are effectively smoothed out. It is during periods of volatility that pound cost averaging comes into its own – not only can regular investing smooth out the volatility in your fund price fluctuations, you may actually be in a position to make a greater profit than a lump sum investor as this example shows.
| Date | Unit Price | Number of units purchased by a lump sum investor with £2,000 | Number of units purchased by a regular investor investing £400 per month (totalling £2,000) |
|---|
| January | 100p | 2,000 | 400 |
| February | 140p | - | 286 |
| March | 75p | - | 533 |
| April | 100p | - | 400 |
| May | 90p | - | 444 |
| Total number of units | 2,000 | 2,063 |
| Average price for a fund unit for the regular investor is 97p. |
As you can see from the table above, when the unit price of the fund rises, the regular investor invests in less units. However, the regular investor can invest in more units when the price falls and, indeed, over the five month period, the regular investor actually invests in more units than the lump sum investor.
You might also have noticed that the average unit price paid by the regular investor is lower than that paid by the lump sum investor, so the regular investor could potentially make a greater return on his investment.
Also, you will always be invested in the market so there is no chance that you’ll miss out on any upswing in the value of your chosen fund.
Don’t forget as of 6 April 2012, you can invest up to £940 a month in an ISA. To update your Regular Investment mandate, call our Investor Support Team FREE on 0800 597 2525.