Regular investing is one of the most effective and safest ways to build a reserve and grow money for the future.
Many people wait for the right moment to start investing. In theory, it's great to buy low and sell high, but in practice, it often doesn't work that way.
You don't need a large sum of money, time, or extensive knowledge for regular investing. Simultaneously, it exposes you to less risk.
—> Regular investing helps eliminate sharp fluctuations in your portfolio.
Regular investing doesn't seek the best time to buy but relies on consistency and price averaging – leveraging market fluctuations to your advantage. When markets fall, you buy more units, hence cheaper. When markets rise, your money appreciates better.
Regular investment is suitable, for instance, if you're a beginner in investing, have a long investment horizon, or don't have a large sum of money – you can invest even small amounts monthly. These regular smaller amounts will help build your reserve.
To build a sufficient financial reserve, it's recommended to regularly save around 10% of your available monthly income.
Our clients achieve the best results by combining regular investment supported by a lump sum.
The purpose of your investment is entirely up to you – whether you want to buy a small retirement home, pay for your children's education abroad, or desire financial independence in retirement.
Regular Investment and Black Friday
Regular investing would have saved investors during the 1929 - so-called Black Friday. With a one-time investment, you would have quickly lost almost 90% of the value in 1929, and if you held on (didn’t sell), it would have taken you about 25 years to return to the investment value.
Certainly, even with regular investing, you would have experienced losses, but with regular purchases, you would have bought cheap assets in large quantities. Their subsequent growth would have returned you to the original value much quicker. Depending on the specific parameters of regular investing, instead of 25 years, we're talking about approximately 5 to 6 years, which isn't such a significant time horizon.
What's the Magic?
When stock prices are high, the value of your previous cheaper purchases grows. When stock prices fall, you buy them cheaper and look forward to their future growth.
You might wonder why buy stocks when their prices have increased? That's the magic of regular investing. A stock that was 400 CZK and eventually rises to 1000 CZK may still be very cheap because its future price could be significantly higher.
We never know if a stock's price will rise or fall, but with regular investing, you average the purchase price, so price fluctuations don't bother you.
Therefore, you earn on the growth of your stock prices and on time. The longer you invest, the more your profit grows – thanks to reinvestment, dividend payments, or the mentioned stock price growth.
Imagine investing 2000 CZK every month.
For the first few months, you buy 10 shares, but then it drops, and you buy only 5 shares. However, you keep investing because you're 200 CZK ahead on the initial shares.
But the next month, you buy only 2 shares for 2000 CZK. No reason to panic. The first month you had a share for 200 CZK, the second for 400, and the third for 1000 CZK. The next month, the price returns, and you buy 10 shares again for 2000 CZK.
You don't stop investing because you're ahead on the initial purchases and now have a good opportunity to buy additional shares very cheaply. A drop in price is a reason to rejoice because you're buying on sale. When the stock price rises again, thanks to the cheap purchases, your money will appreciate even more.
Interested in starting regular investing?
Do not hesitate to contact us