Is there space in your monthly budget for a regular investment? There are a lot of benefits to the drip-feed approach. Here’s why it is time to invest by direct debit.
It’s not long since you needed a large chunk of cash to start investing. That’s changed now, and Moneycube can arrange investments from €250 per month.
We’ve described some of the benefits of choosing to invest by direct debit each month.
1. It’s easier to be good with your money
Setting up a direct debit investment helps you keep good money habits. The amount you set is debited from your bank account by the fund provider each month, and invested for you in your chosen investment fund.
You can choose a regular date for the money to leave your account, and see the monthly buildup of your investment wealth.
2. Starting is easier if you invest by direct debit
It often takes time to build up a lump sum, and inflation is eating into it while it stays on deposit. If you start investing with smaller amounts, your money gets working for you more quickly.
What’s more, many of us know we should be doing something more with the cash that’s lying in our bank accounts, but put it off until we’ve more to spare. With a regular monthly investment, you are solving that problem little by little.
At Moneycube, we do this online.
3. You don’t need to time the market
Markets move all the time. When you add to your investment on a regular basis, you’re averaging out the cost at which you invest. (This is known as Euro-cost averaging in the business).
For you, the investor, this means you’re not taking a gamble on a particular period being a high or a low point in the market. Instead you are smoothing out (or averaging) the cost at which you invest.
4. Combat the impact of inflation
Inflation in Ireland is currently running at more than 5% per year, according to the Central Statistics Office. If your money is lying in cash in the bank, its purchasing power is being eroded month by month.
Yes, central bank interest rates are rising around the world. But there’s little sign of improvement in the deposit returns available from Irish banks.
A search on Bonkers.ie reveals the best rate available for a regular saving account of €500 per month is presently 0.25%. As inflation is running at around 22 times that rate, deposit interest is hardly worth the effort.
In fact, after tax, the annual interest on saving €500 per month into a deposit account paying just 0.25% would amount to around €3.38.
5. Start now, change later
Once your regular investment is in place, it’s easy to make changes. You can withdraw some funds, for example.
It’s also simple to increase your regular payment.
Or you can re-allocate your money into different investment funds. For example, you could lock in gains in higher-growth funds by moving some money into a fund with a lower risk/ reward profile.
Slow and steady wins the race – consider putting a direct debit investment plan in place today.
