Julian Knight: Drip-feed money into the markets to avoid bad timing

Bad month for the bulls – but this is no concern if you follow the path of 'pound cost averaging'

"Sell in May and go away, come back on St Leger Day (14 September)" is an old City saying which you probably would have been wise to have followed this year, looking at how markets have plunged since the start of last month.

However, research shows that, for every year the saying proves correct, there are just as many it turns out to be wrong. In other words, it is codswallop.

But I can't deny, having been incredibly bullish on the markets, we have suffered a few bad weeks.

This is nothing to do with the UK economy, which is ticking along far better than our eurozone rivals. It's down to concerns over a potential softening of output in the US and the possibility that the much-lauded Abenomics in Japan may yet prove to be another false dawn.

However, for most private investors, such a short-term reverse as we have seen with markets falling off 10 per cent in a month really shouldn't be a worry – not if you follow the path of pound cost averaging.

Pound cost averaging is actually the worst sort of money jargon. It takes a simple concept and makes it seem incredibly complex.

In essence, pound cost averaging is a gradual drip-feeding of money into the markets – the easiest way is through monthly direct debit. So, even when markets are falling, you have the bonus of staying invested and your new cash is simply buying more stock.

It takes timing out of the whole investment equation and means you don't have to listen to nonsense sayings like "sell in May".

Chuggers are back

I spoke too soon. Having stated how pleased I was that the chuggers who pollute the pavements outside my offices had seemingly given up the ghost, they are back with a vengeance.

This time it was the British Red Cross chuggers who were accosting people in their droves on the narrowest parts of the pavement in a busy and already overcrowded shopping street.

I saw one partially sighted person having to walk in the gutter thanks to one of these chuggers occupying the pavement.

Some town centres such as Shrewsbury have banned chuggers altogether and I thought the authorities here were doing something about it – such as limiting how close to stations they can stand. It seems not.

I don't quite understand why charities believe it is good for their reputation to employ these chuggers – which often earn bumper commissions for third party non-charitable firms – from getting people to sign on the dotted line.

What is worse about the whole practice is that many believe that the person they are speaking to is a volunteer. Not a bit of it – they are often handsomely paid for their spiel and the charity may only benefit from the direct debit after the first year.

What I suggest is that the charitable sector signs up to a code of conduct whereby only volunteers can do this sort of marketing and there is no money whatsoever going to a third party firm.

There should also be a strict limit on the number of days a high street can be targeted and should be confined to, say, one or two chuggers full stop. Maybe if the charitable sector did this I would start to use their spin doctor phrase of "face-to-face fundraisers" rather than chuggers – a mix of charity collector and mugger.

Strange world

I keep getting emails about the upcoming changes to rules governing credit unions.

Whereas I am supportive of the sector in the main I am still concerned at the professionalism of some of the unions, particularly as they are being given the opportunity to grow their lending books considerably.

However, I suppose against a backdrop of often exploitative payday lending, it is good to have an alternative source of funds for lower social economic groupings.

I find it a little odd, though, that one of the key ways that credit unions are going to be allowed to fund their new status is by allowing them to charge a much higher rate of interest on loans than they can at present.

It is a strange world that you increase access to credit by making it in effect more expensive.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
News
people
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
filmDirector said film would 'never have been financed' with ethnic minority actors in key roles
News
people
Sport
footballArsenal 2 Borussia Dortmund 0: And they can still top the group
PROMOTED VIDEO
Arts and Entertainment
An unseen image of Kurt Cobain at home featured in the film 'Kurt Cobain: Montage of Heck'
film
News
Andy Murray with his girlfriend of nine years, Kim Sears who he has got engaged to
peopleWimbledon champion announces engagement to girlfriend Kim Sears
Arts and Entertainment
Jake Quickenden and Edwina Currie are joining the I'm A Celebrity...Get Me Out Of Here! camp
tv
Arts and Entertainment
George Mpanga has been shortlisted for the Critics’ Choice prize
music
News
Albert Camus (left) and Jean-Paul Sartre fell out in 1952 and did not speak again before Camus’s death
people
Arts and Entertainment
Roisin, James and Sanjay in the boardroom
tvReview: This week's failing project manager had to go
News
Ed Miliband visiting the Holocaust museum in Jerusalem. The Labour leader has spoken more openly of his heritage recently
newsAttacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But are the barbs more sinister?
Arts and Entertainment
'Felfie' (2014) by Alison Jackson
photographyNew exhibition shows how female creatives are changing the way women are portrayed in advertising
News
i100
Extras
indybest
Life and Style
Fright night: the board game dates back to at least 1890
life
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ampersand Consulting LLP: UI Designer/ User Interface Designer (UI, User Flow, Design)

    £6000 - £60000 per annum + Bonus and Benefits: Ampersand Consulting LLP: UI De...

    SThree: The benefits of Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    h2 Recruit Ltd: Head of Regional Sales - Financial Software - £130,000 OTE

    Negotiable: h2 Recruit Ltd: A rapidly expanding, global Software/ SaaS Vendor ...

    SThree: Trainee Recruitment Consultants

    £20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

    Day In a Page

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
    Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

    Sol Campbell cries foul at Labour's mansion tax

    The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
    Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

    Sarkozy returns

    The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
    Is the criticism of Ed Miliband a coded form of anti-Semitism?

    Is the criticism of Miliband anti-Semitic?

    Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
    Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

    Ouija boards are the must-have festive gift

    Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
    There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

    In pictures: There's a Good Girl exhibition

    The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
    UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

    UK firm Biscuiteers is giving cookies a makeover

    It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
    Can SkySaga capture the Minecraft magic?

    Can SkySaga capture the Minecraft magic?

    It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
    The King's School is way ahead of the pack when it comes to using the latest classroom technology

    Staying connected: The King's School

    The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
    Christmas 2014: 23 best women's perfumes

    Festively fragrant: the best women's perfumes

    Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
    Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

    Arsenal vs Borussia Dortmund

    The Ox celebrates century with trademark display of speed and intuition
    Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

    When two worlds collide

    Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
    Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

    Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

    Our partner charities help veterans on the brink – and get them back on their feet
    Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

    Putin’s far-right ambition

    Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
    Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

    Escape to Moominland

    What was the inspiration for Finland's most famous family?