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3 reasons why regular saving still makes sense

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IT may be a new year, but that doesn’t mean last year’s challenges are behind us. The cost-of-living crisis is not going away, despite oil and gas prices dropping. And that’s because we’re still faced with double digit inflation, high interest rates and wages that are failing to keep pace with costs. 

When the outlook – on the face of it at least – feels bleak, investing might feel counter-intuitive. Especially as some fixed term saving accounts are offering 4% returns (offering some protection from the effect of inflation). But with many experts expecting inflation to be around for a good while yet, the odds are still stacked against you. Investing at least gives your money the potential to grow over time.  

It’s one of the reasons I’m staying invested. I’ve got a youngish family, so I’ve got my sights set on the long term and I’m looking out for my children’s best interests as well as my own. What I find makes investing feel more affordable is saving regularly. By investing a little and often I know – just by looking back at my savings over time – that it can make a real difference. 

Here are three more reasons why saving regularly makes sense… even when it might not feel sensible at all. 

Helps you avoid trying to time the market

Every bone in your body might be calling out for you to sell your investments when the markets fall, but if you do this, you’ll only lock in any losses you’ll have made. By saving regularly, you’ll avoid the temptation to try and time the market, which is something even the experts find hard to do. And this is because you need to second-guess the markets twice to successfully pull it off – once when the markets bottom out and once when they’re at their peak. 

If you’ve kept your ear to the ground, you’ll know all too well that the markets have really taken off in the last few weeks. In fact, the FTSE 100 has continued to get close to its May 2018 all-time high, which supports the theory that it really can pay to keep investing… even when the economy’s looking gloomy. 

Allows you to take advantage of pound cost averaging 

By regularly investing you benefit from something known as pound cost averaging. This may sound complicated, but it’s really not. Invest the same amount regularly each month and when prices are low your money will buy more than when prices are high. The idea is that over time the price you pay evens out as the markets rise and fall.

Takes the emotion out of investing 

It’s said that fear and greed are the main drivers of the markets. And that investors feel the weight of losses greater than they do gains. A regular savings plan can take the emotion out of investing as once you’re set up you can step away and leave your investments to it. 

Then it’s a case of staying invested and holding your nerve – keeping your sights set on the long term and sticking with an investing strategy that’s designed to meet your goals. History shows that markets recover in the long term, so as much as it may pain you to do so – it’s worth investing even when it feels hard to do so, especially if you’ve got time on your side. 

Easy to set up a regular savings plan

If you don’t currently have a regular savings plan it really doesn’t take long to set one up. Simply log in at fidelity.co.uk and click on ‘Manage investments’, then ‘Regular savings plan’. This brings up a list of all your accounts and you just click the ‘Create’ button and follow the simple instructions. In no time at all you’ll be up and running. 

Learn more about the benefits of regular saving here



Read More: 3 reasons why regular saving still makes sense

2023-01-25 11:38:34

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