Friend of mine, Matt P and a long time listener sent me a link to a website where a guy had written

a pretty good post about why he doesn't believe in pound cost averaging.

Now this guy's arguments, not Matt, the link that he sent me to, the arguments

were mathematically perfectly sound. But more than ever, I'm convinced that financial

success is less about maths and more about human behavior. So let's explore that a

little bit today. Welcome back to another five minute Friday

great to have you with me human behavior is a fascinating subject

we're never gonna deal with it in five minutes but let's put five minutes on the

clock down here so a quick thank you to my friends at 7 Investment Management down here

for continuing to sponsor meaningful money

and let's crack on.

So pound cost averaging.

That's the process of dripping money into the markets over time and it makes sense in so many

ways the idea is that as markets rise and fall and you drip money in as the markets

are rising and falling, you buy units or shares, whatever it is you're buying, at different prices along the way.

And in so doing, you smooth out the ups and downs of the stock market simply by buying at different prices.

When market is down you will buy more shares.

When the market is up, the ones you bought at the bottom will be worth more,

but the ones that you now buy towards the

top of the market you will buy fewer of them and that whole thing adds a smoothing effect

to your investing. Now the article that Matt pointed me to correctly says that by engaging in pound cost averaging

you are betting that the market will fall because if you knew the market was going to rise you would put

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