Setting up regular investing is a terrific way to automate your investments and take the day-to-day hassle out of investing. Here we explain how it works, the benefits and the checks you should make to stay on track.

What is regular investing?

The regular investment service lets you save as little as £25 a month into investments of your choice. You set up the service, pick how much you want to invest each month and then select which investments you want to buy and then you’re sorted. You just need to ensure you have enough cash in your account – or you can set up a direct debit from your bank account to pay cash in each month.

What are the benefits?

The big benefit it not having to worry about remembering to invest each month. Often we intend to fund our investment account but forget to do it, meaning that we invest in fits and starts. But with regular investing you will invest the same amount each month without having to remember.

Another benefit is that you get a discounted dealing charge – meaning whatever investment you pick it will only cost you £1.50 to buy. You can pick from a huge range of investments, from popular shares, funds, investment trusts and ETFs. Considering buying shares, investment trusts and ETFs can cost up to £9.95 – that’s a big saving.

Perhaps the biggest win of regular investing is avoiding trying to time the market. Lots of people might sit on the sidelines thinking that they can pinpoint when to get into stock markets. But history has shown us that it’s very hard to time the market accurately (even the professionals struggle to do it consistently). It means that often investors miss out on market gains because they are waiting for the ideal time to invest. By investing every month and automating it, you avoid trying to time the market. Data shows that investing regularly and drip-feeding money in can benefit your investments over the long term called pound cost averaging. It means that because you’re buying at different times, when markets may have risen or fallen, you smooth out the ups and downs of the market over time and lower the risk of your portfolio.

What if I’m already regular investing, is it totally hands off?

One of the benefits of regular investing is that you can set it up and then forget about it – but it’s important to check on it every so often to make sure it’s still working for you. Below is a three-point checklist to keep you on track.

Regular investing – three-point checklist 

1. Are you saving enough?

If you set up your regular investing a while ago, you might find that you could increase the amount you’re paying in each month. If you’ve had a pay rise during that time, got money in cash you could invest or just seen your disposable income increase, you could boost the amount you invest. Even a slight increase can make a significant difference over the long term. An extra £50 a month invested would increase your savings by almost £8,000 after 10 years (assumes growth of 5% a year, compounded annually). And after 20 years it would boost the pot by almost £21,000. If you could put away an extra £150 a month that would equate to almost £24,000 after 10 years and £62,500 after 20 years.

2. Have you picked the right investments?

 Our investing goals and time horizons change over time, which means our investments might need to shift too. That means it’s a good idea to check what funds your regular investing money is buying and whether they are still right for you. If you’re closer to your investment goal, whether that’s buying a house, retirement or something else, you might want to lower the risk of your investments. Equally, you might have originally invested in a fund that is more targeted and now you want a broader investment – or vice versa. You can check out our tips on spring cleaning your investments, to give you some ideas of the checks you should be making periodically. If you do need to change the investments you’re buying each month, it’s a remarkably simple process that takes a few clicks.

3. Are you saving into the right account?

You should check that your regular investing money is going into the right account. You might have originally set it up in your general investing or dealing account, but actually could benefit from the tax efficiency of a Stocks & Shares ISA. Equally you might now benefit from opening a Lifetime ISA, if you’re saving for your first home or for retirement – in which case you could switch your regular investing contributions into that account. Read more details about each account here, to work out which one is right for you – and check your money is going to the right place.

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