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Benefits of regular investing

Regular investing – how can you benefit?

Regular investing offers you a range of benefits including:

• Averaging out the buy price of investments (pound cost averaging)
• Dealing charges can work out cheaper than normal dealing
• An easy way to build up your portfolio

Learn about our Regular Investment Service.

Pound cost averaging

One of the main benefits of regular investing is the ability to average out the buy price of investments. This is often referred to as Pound Cost Averaging and works best with investments that change value, such as shares or funds.

By regularly investing the same amount of money each month, you buy more shares when the price goes down and fewer shares when the price goes up. As such, you don't have to worry about getting the timing of purchases exactly right. And, over time, the number of shares you own are effectively bought at an average price.

Pound cost averaging example 1

In a rising market, your regular investment buys you less shares for your money as the share price increases but the average price you pay per share is lower.

Month	Regular amount	Share price	Number of shares bought
1	£100	£2.00	50
2	£100	£2.50	40
3	£100	£5.00	20

Average share price in period (£9.50 divided by 3 months) = £3.17

Average purchase price achieved (£300 divided by 110 shares) = £2.73

Pound cost averaging example 2

In a falling market, your regular investment buys you more shares for your money as the share price drops and the average price you pay per share is lower.

Month	Regular amount	Share price	Number of shares bought
1	£100	£2.50	40
2	£100	£2.00	50
3	£100	£1.00	100

Average share price in period (£5.50 divided by 3 months) = £1.83

Average purchase price achieved (£300 divided by 190 shares) = £1.58

Learn about our Regular Investment Service.

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