Consider investing small and regularly
A regular savings plan is a great habit to get into and even a small sum invested each month can soon grow into a useful amount.
By saving a regular amount you can actually benefit from the highs and lows of the market. When prices go down, your regular investment contribution can purchase more shares and, when prices go up, fewer shares. The overall cost of investing can be lowered over time, as you may acquire a larger number of shares at a smaller average price. This is called Dollar Cost Averaging.
However, remember, regular savings and investing lump sum amounts should be complementary and not a choice of one over the other since lump sum amounts may help you invest at the right time to purchase a larger number of shares at the right time.
The chart in the example compares the results of investing a lump sum of USD 3000 on one day, with an alternative regular savings plan of USD 500 per month for 6 months.
Although it is not guaranteed, regular savings plans can accumulate more shares compared to a lump sum investment.