The best time to invest is... regularly

This year I want to buy a house.... hopefully

The Power of Regular Investing

With markets so hard to predict, trying to time your investment is notoriously difficult and time consuming. When markets are high, everyone wants a piece of the cake, but when markets downturn, all investors run for the hills choosing to hide their money somewhere "safe". So how does a regular investment plan compare to timing a once-off lump sum investment?

• Ride out short-term volatility of financial markets: invest regularly to smooth out periods of market pitfalls and maintaining relatively stable returns.

• Beneficial in the long run: make sure you keep your eye on the prize. Rather than focusing on short term market fluctuations, building a regular investment plan gives your money the time to grow over the horizon as markets will generally trend up in the long term.

Lets have a look at an example:

Source: ANZ

Assumptions: Calculations do not account for taxation and assumes both investors earned 8%p.a. and all investment returns are reinvested. The results may vary if different dollar amounts are invested and if the return earned varies from 8% p.a.

You must be thinking "What, how? Chris invests $3,000 more than Linda per year, how does Linda end up with a higher return?"

No, calculations are not misleading and yes, that is indeed correct. Even though Chris invested $30,000 more than Linda overall, by the age of 60, Linda has accumulated $100,000 more in wealth than Chris. This shows the benefits of starting early and giving your money the time to grow.