Benefits to investing frequently

Setting your savings and investment goals requires a few simple steps:

Step 1: Figure out what you want to achieve
Your savings goals are very personal and may change over time. Be it retirement, a vacation or your child's education, everyone is saving for something. Write down these goals so that you can reassess in time.

Step 2: Devise a plan
Get started by working out how much your bills cost each month (mortgage or rent, utilities, etc.) and what you have left. Set up a realistic budget that works for you and your family. Write this budget down, too, so that you can easily make any neccessary adjustments.

Step 3: Pay into your savings first
With your savings goals and budget in hand, determine what percentage you can reasonably save each month. When you get your next paycheque, don't do anything until you have moved this money into your savings. For the best results, pay yourself first and do it often.

There are plenty of benefits to investing regularly, but here are two reasons why it really makes an impact.

Dollar cost averaging
If you're like most people, it's easier to save frequently as opposed to saving up large lump sums. This is actually a savvy way to invest, and it's all because of dollar cost averaging. For example, if you invest $500 today, another $500 next month, and so on, you capture more market cyclesbuying high and buying low. Over time, your costs are averaged out (as opposed to making lump sum payments, where the risk of buying high is greater).

In addition to capturing these market cycles, saving regularly provides the discipline most people need to achieve their savings and investment goals.

Market timing
Trying to "time" when to get in or out of the market is layered with many pitfalls. Most people make these decisions when emotions are running high. More often than not, fear and panic cause investors to exit the market when it has already crashed, and re-enter (at higher costs) when the market is well into recovery.

Go to Your Smart Money Tool to set up a savings plan today.