New research* from Legal & General Investments reveals that during the recent market volatility, almost half of investors are making ‘saving regularly' their investment strategy.
The findings come from Legal & General Investments' annual What Matters Investment Index which aims to investigate the views of the everyday investor, and track how sentiment and behaviour changes over time.
The research shows that 48% of investors are currently opting to invest monthly rather than on a lump sum basis. This contrasts with 2010 when only 12% of investors were investing funds monthly, with the majority (64%) opting to invest a yearly lump sum.
This trend to invest more regularly could be due to a desire to drip feed monies into investments or simply due to a lack of lump sum funds. Regardless of the reasons why, drip feeding investments on a regular basis helps mitigate risk, especially in a volatile market. By investing on a monthly basis, rather than on a lump-sum basis, investors are able to smooth out the highs and lows of the market.
Despite this recent change in investment strategy, the primary reason for investments remains fundamentally unchanged from 2010 with 50% looking for growth and 13% looking for income.
|
Primary reason for investing |
% investing for growth/ income in 2011 |
% investing for growth/ income in 2010 |
|
Income |
13% |
11% |
|
Growth |
50% |
49% |
|
Both |
37% |
39% |
Simon Ellis, Managing Director, Legal & General Investments, said:
"The current markets have been challenging and difficult to predict. Investors are rightly amending their investment strategies to cater to this environment and saving regularly is a good habit to get into. Adopting a pound cost averaging approach - that is to say, investing the same amount each month - is a considered approach and it is interesting to see that the percentage of investors doing this has gone up fourfold since 2010.
"As always, regardless of the state of the market, the best way to safeguard against volatility is to develop a balanced portfolio so exposure is spread across sectors and asset classes."
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