Regular Saving.

The last few years have been a turbulent time in the equity markets, but that doesn’t necessarily mean you shouldn’t invest in equities. Regular monthly investments into an ISA or unit trust can help to reduce some of the risk by taking the guesswork out of when to invest and averaging out the cost of buying your units.

Playing it Smooth

Making regular monthly investments can mean you benefit from what’s known as ‘pound cost averaging’. 

The key point to investing this way is that when prices are high your monthly contribution may buy fewer units but when prices are low your contribution buys more units. This tends to average out the price you've paid for your units over the long term and creates a regular savings habit. 

Below is a graph that shows the value of a £100 regular monthly investment versus a regular yearly £1,200 lump sum investment into the Legal & General UK Index Trust. This five year period includes the height of the credit crisis when markets were hugely volatile.

UK Index Trust five year performance of a yearly lump sum versus a regular monthly investment

Source: Lipper. The table and graph above show the annual performance of the investment in the fund over five years, as at 31 December 2012. They take into account the annual management charge and extra expenses, and assume net income is reinvested. Both the monthly and yearly investments began in December 2007.

Past performance is not a guide to future performance.

Your Regular Investment Options

There are a couple of ways that you can invest regular monthly amounts in a Legal & General fund:

• Legal & General offers a regular investment option on its range of funds from as little as £50 a month. The standard stocks and shares ISA limit for all investors for this tax year is £11,520 (up to 5 April 2014) or £960 a month.
• Legal & General also offers a phased investment option, which allows you to use your annual ISA allowance at any time in a tax year. However this option is only available to new ISA investments into some of our index-tracking funds and is not available for ISA transfers. Some points on phased investments:
  • Invest a minimum of £3,000 from your ISA allowance at any point during the tax year. This goes into the phased cash account.
  • We then distribute your money to the fund(s) of your choice over 12 equal monthly instalments. Any interest earned while your money is in the phased cash account will be included in the final month's instalment. 

• Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed.
• You may get back less than you invest.
• Although there is no fixed term you should consider ISA and unit trust investments to be medium to long term, ideally five years or more.

*Each trust has its own individual risks detailed in the individual 'Key Investor Information' documents. More general information can be found in ' Additional fund information document (PDF:655KB) ' and ' A guide to investing with us (PDF:812KB) '. Before you decide to invest you must read these documents.