As the end of the tax year approaches, many people look to use their pension or ISA allowances with a lump sum investment. However, with the markets currently experiencing so much volatility, these decisions can feel more stressful than usual.
It’s natural to worry about putting money in today only for markets to fall tomorrow. The news headlines often make market movements sound dramatic, which only adds to the anxiety, even when the long term outlook could be positive, the fear of short term losses can make lump sum investing feel risky.
If this sounds familiar, there is a gentler alternative: investing monthly. This approach—known as pound-cost averaging—means investing a fixed amount at regular intervals, regardless of market conditions. When prices fall, you buy more units; when prices rise, you buy fewer. Over time, this helps smooth out the price you pay and removes the pressure of trying to pick the ‘perfect’ moment to invest.
For anyone feeling uncertain right now, monthly investing can reduce stress, make decisions easier, and still ensure your allowances are used effectively.
In times of market volatility, it’s also important to review any regular withdrawals you are taking from an investment or pension fund. When markets fall, a fixed monthly withdrawal means you must sell more units to generate the same level of income. Those units are then no longer invested when markets recover, which can reduce the long‑term sustainability of your fund.
If you are taking monthly withdrawals and have the flexibility it can be beneficial to reduce, pause, or adjust them during periods of volatility.
As we enter into a new tax year this is an ideal time to consider your options. So if you would like to give this further consideration, and if you would like to find out more why not pick up the phone today and book a free without obligation consultation.
The content included on this page is based on our understanding of the UK tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances.