Product category:
General insurance
News Release from: Fidelity International | Subject: Insurance
Edited by the Insidemoneytalk Editorial
Team on 24 August 2007
Regular saving can take the sting out of
market falls, says Fidelity
International
Investors who save regularly can capitalise on "pound cost averaging"
Drip-feeding money into markets is a tried and tested method of dealing with the type of volatility currently seen in world equity and bonds markets, says Fidelity International, the leading investment management and services group By putting regular, monthly sums into share-based funds, investors can benefit from "pound cost averaging"
This article was originally published on Insidemoneytalk on 12 Apr 2007 at 8.00am (UK)
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It enables savers to take advantage of falls in stock prices through a disciplined process of buying more shares at lower values.
Most Fidelity mutual funds will accept monthly contributions from as little as £50.
The graph shows how pound cost averaging works and the table below compares the returns achieved by a lump sum investor and someone who spreads their investment over 12 months.
The regular saver finishes the period with an investment that is worth more than that of the lump sum investor, even though the starting price, finishing price and average price are exactly the same*.
Richard Wastcoat, UK Managing Director at Fidelity International, said: "When markets fall, understandably investors lose confidence and either stop investing new money or redeem their holdings".
"However, investors who are concerned about market volatility could consider a regular savings plan".
"By investing a consistent amount at regular intervals, investors can gradually 'drip-feed' into the market regardless of the price on any given day".
"This strategy is known as pound cost averaging and will help smooth out the effect of market changes on the value of investments." Fidelity International Limited ("FIL") and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US.
The FIL Organisation manages a total of ?145.0 billion of assets.
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