‘From little acorns, large oak trees grow’…
Save
from as little as 150USD per month/1800USD per year
At outset, when you invest on a regular monthly or annual
basis, it is important to remain focused on your investment goals,
which could include:
These tend to be long-term goals. This
means that you should take a long-term view when considering
your
investment
strategy. Unlike investing with a single premium
or lump sum where timing
of your entry into the market is of paramount importance,
if your retirement is 15 to 20 years away, then short
term
volatility
is not likely to have a great effect on the end result.
Consider the following:
Each premium payment made to your regular
premium plan purchases units in a mutual fund. The value
of your
investment depends
on the number of units you buy and the price of those
units. After a market fall, cash-in values will,
naturally, be
lower: however, professional investors often see
this as an opportunity
to buy rather than a reason to sell. In times of
low market values, they will be able to buy a higher
number
of units
for their money, and will wait for markets to recover
to see their
investment rise.
For the average investor the best way
to benefit from the peaks and troughs of the market is
by making
regular
premium
payments:
By investing on a regular basis you can
benefit from each low point in the market and buy a higher
number
of units
as a result.
Again, this will lead to greater potential long-term
growth as markets rise over time.
Lock in the gains
If you know that you will want to withdraw
all your funds at a certain date, you plan for this by
switching
to
more secure
funds shortly before that time arrives. In this way,
your investment funds are protected against a market
fall just
at the time
when the funds are needed and you surrender your
plan in full. Individual strategies will, of course,
depend
on
personal attitude
to risk.
Volatile Market Performance can help
boost the value of your funds
Whilst it seems likely that there will
be continued volatility in the world’s stock markets, this does not mean that
this is the wrong time to invest. The table below illustrates
the potential returns from two funds with US$500 a month
invested in each case. The unit price in the volatile fund
(X) is considerably
lower throughout than that of the stable fund (Y). One might
assume therefore, that the total returns under fund X would
also be lower. However, the lower unit price means that more
units have been purchased with each US$ 500 and, as the figures
in the table below demonstrate, after twelve months the returns
on the volatile fund were higher than the returns from the
stable fund.
Fund X (Volatile Performance)
Month Unit Price Units Purchased
Total Investment $6000
|
Fund Y (Stable Performance)
Month Unit Price Units Purchased
Total Investment $6000
|
| 1 |
$10.00 |
50.00 |
1 |
$10.00 |
50.00 |
| 2 |
$5.00 |
100.00 |
2 |
$11.00 |
45.46 |
| 3 |
$9.00 |
55.55 |
3 |
$12.00 |
41.67 |
| 4 |
$5.00 |
100.00 |
4 |
$13.00 |
38.46 |
| 5 |
$8.00 |
62.50 |
5 |
$14.00 |
35.71 |
| 6 |
$3.00 |
125.00 |
6 |
$15.00 |
33.33 |
| 7 |
$6.00 |
83.35 |
7 |
$16.00 |
31.25 |
| 8 |
$1.00 |
125.00 |
8 |
$17.00 |
29.41 |
| 9 |
$5.00 |
100.00 |
9 |
$18.00 |
27.78 |
| 10 |
$3.00 |
125.00 |
10 |
$19.00 |
26.32 |
| 11 |
$7.00 |
71.45 |
11 |
$20.00 |
25.00 |
| 12 |
$10.00 |
50.00 |
12 |
$21.00 |
23.81 |
| Total Units: |
1047.85 |
Total Units: |
408.20 |
| Total Value |
$10,478.50 |
Total Value |
$8,572.20 |
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