Is now the time to invest?

If you are someone who has steered clear of the stock market during the recent ups and downs, have you given any thought to when it might be the right time to go back in?

Nobody can ‘pick’ the bottom of the market, not even the experts, so one way to re-enter the market is gradually, by drip-feeding your investment over time. This way you are less vulnerable to erratic swings in prices. Look at the following example of someone with £12,000 to invest.

	Investment	Unit price (pence)	Units bought
1 April	£2,000	100.00	2,000
1 May	£2,000	80.00	2,500
1 June	£2,000	100.00	2,000
1 July	£2,000	111.11	1,800
1 August	£2,000	95.23	2,100
1 September	£2,000	100.00	2,000
Total	£12,000		12,400

Total value: 12400 x 100p = £12,400

Although this example assumes erratic performance, and ignores the effect of charges, it does illustrate the point. Although the unit price is the same as at the beginning of the period the total investment is now worth £12,400. Compare this with a lump sum investment of £12,000 on 1 April.

	Investment	Unit price (pence)	Units bought
1 April	£2,000	100.00	2,000

Although the whole £12,000 has been invested for longer, on 1 September it is still worth £12,000 because the unit price is the same as the day the money was invested.

If you want to discuss your future investment strategy, contact us without delay.

The value of investments can fall as well as rise and you can get back less than you invested.

 

Copyright Finance Speak Spring 2009