A short explainer (video transcript) by Ndubuisi 'Andy' Egwim describing pound cost averaging (regular fixed-amount investing). The speaker emphasizes set-and-forget monthly contributions, argues it removes the need to time the market, and discusses how fixed contributions buy fewer shares when prices are high (bull market) and more when prices are low.
Okay, so some people want to do pound cost averaging. Why? Because it doesn't require you to be disciplined. It doesn't require to make any good investment decisions. You are not timing the market because as they say, time in the market is better than timing the market. So what happens that if they are buying when the market is high, let's say you are putting in, let's say, a thousand pounds every month and it's going by direct debit is set and forget. So if the market is overheated, I usually say when there's a bull market and the market is quite high, the prices of stocks are high. What happens your £1,000, will you be able to buy more stocks or less stocks? So I'll say it again. So let's say you're, you're doing pound cost averages. So you're just putting in the same amount and it's going in every single month. You're not sort of like having to change anything. So if you put in a thousand pounds, but the prices of stocks are so high, so that's a bullish market. Everyone is excited. They think the column is doing well. Will your £1,000 buy more or less of that fund or the stocks you're buying? Yes. Excellent.
