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Faut-il privilégier l’investissement forfaitaire, ou régulier ?

Working out how much to invest and when to do so is something investors often agonise about just as much as where to put their money.

Should you invest a lump sum and hope you’ve timed it right, or drip-feed money in slowly every month so that you don’t have to try and predict stock market fluctuations?

The effect of euro-cost averaging

Euro-cost averaging involves investing a fixed amount of money on a regular basis. If you have managed to set aside €1,000 and are thinking about how to invest it in shares, you have two options:

Option 1: Lump sum investing

Lump sum of €1,000 to invest in a particular share
    
This would buy you 10 shares at €100 each
    
Assuming the share price recovered to €10 at the end of 10 months, your investment would be worth €1,000.


    

However, you would be fully exposed to the market, with the value of your investment rising or falling in line with share price changes.

Option 2: Regular investing

In our view, drip-feeding money into the market on a regular basis is a more sensible option, as it can help long-term investors to endure periods of market volatility.

Assuming the share price recovered to €10 at the end of 10 months, your 112 shares would be worth €1,120.


      

Of course, the reverse could happen. If share prices rose over the same period, your monthly investment would buy you fewer shares, leaving you worse off at the end.

Invest for the long term and stay diversified

Generally speaking, there will always be competing factors to consider that may impact the market environment and create volatility.

No asset class is going to win out all the time. By diversifying across multiple asset classes and returns, you should be suitably prepared for any market wobbles, whenever they arise.

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This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.