Drip by drip: The simple investment habit that can pay off

By Morna Beattie, dental Specialist Financial Adviser at Wesleyan Financial Services

As a dentist, you’re probably used to seeing the long-term value of small, consistent actions — whether it’s encouraging patients to floss daily or keeping on top of your CPD.

The same logic applies to investing. Instead of putting all your money into the market in one go, a strategy called ‘pound cost averaging’ lets you drip-feed investments over time, helping to smooth out bumps in your investment journey.

What is pound cost averaging?

In simple terms, let’s say you have £3,000 to invest. If you put it all in on a singular day, you’re tied to whatever the market is doing at that moment. But if you invest £1,000 a month over three months, you’re not locked into a single price, you’re spreading your buying across different market conditions.

This means you buy more when prices are low and less when they’re high, potentially reducing the average cost of your investment.

A quick example

Imagine you want to invest £3,000. You can either invest it all at once, or split it into three monthly payments of £1,000.

Option 1: Regular investing (pound cost averaging)

• In June, shares cost 100p — you buy 1,000 shares.
• In July, prices dip to 90p — you buy more for your money (1,111 shares).
• In August, prices return to 100p — you buy another 1,000 shares.

Total shares bought: 3,111
Value at end of August: £3,111

Option 2: Lump sum investing

• You invest the full £3,000 in June when shares were 100p.
  Shares bought: 3,000
  Value at end of August: £3,000

In this case, regular investing gave you a better outcome, because you bought more shares when prices dipped.

But what if markets rise steadily instead?

If share prices go up each month (say from 100p to 110p), a lump sum investor would buy at the lower price and end up with more value. Regular investing in this case would buy fewer shares overall — and could leave you slightly worse off.

What’s the point?

Pound cost averaging doesn’t guarantee better returns, but it can help smooth out the impact of market ups and downs, which can be reassuring in uncertain times.

For many dentists, it’s also a more manageable way to invest, especially if you don’t have a large lump sum or prefer to ease into the market gradually.

Note: These examples are for illustration only and don’t reflect real market conditions. Investment charges and tax have been left out for simplicity.

The value of investments can go down as well as up, meaning you might get back less than you invest.

Why does this matter to dentists?

Many dentists make large lump sum investments into pensions or ISAs at the end of the tax year on 5 April. This can be a smart move, especially when looking to make the most of valuable tax allowances before they reset. Pensions, for example, can benefit from tax relief on contributions — meaning a £1,000 investment could effectively cost a higher-rate taxpayer just £600.

But relying solely on a last-minute lump sum can leave you exposed to whatever the markets happen to be doing at that moment. If the market is high, you get fewer units; if it’s low, you might worry about buying at a loss.

Instead, setting up monthly payments by direct debit can help smooth the journey. It spreads your market exposure throughout the year while still making use of your annual ISA and pension allowances. And come tax year end, if you still have headroom to use up, you can always top up with a lump sum before the deadline.

What if markets are rising?

Pound cost averaging works best when markets are volatile or falling. In rising markets, you may end up with slightly lower returns compared to a lucky lump sum investment. You might miss out on some gains when markets rise, but in return, you can reduce risk and gain peace of mind — a trade-off that often makes sense when things feel uncertain.

Risk is part of the journey

As a dental professional, you understand the importance of planning and prevention. Investing works the same way. The markets will always move — and that means your investments will rise and fall in value. But by spreading your contributions and staying invested for the long term, you give yourself the best chance to ride out those ups and downs.

Speak to a specialist

Pound cost averaging is all about consistency. It’s not about trying to time the market — it’s about having a strategy that helps you stay on course to meet those lifetime milestones – such as buying your dream home, saving for retirement or leaving a lasting legacy. Just like preventive dentistry, small, regular steps can lead to big results over time.

Whether you’re putting money into a pension, stocks and shares ISA, or other investment, it’s vital to understand how inflation and market fluctuations affect your financial plans.

If you’re unsure, speaking to a dental specialist financial adviser at Wesleyan Financial Services can help you choose an approach that matches your goals and appetite for risk. Visit wesleyan.co.uk/dental or call 0808 149 9416 to book a conversation.

Charges may apply. You will not be charged until you have agreed to the services you require and the associated costs. Learn more at www.wesleyan.co.uk/charges.

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About Morna

Morna Beattie is a dental Specialist Financial Adviser at Wesleyan Financial Services, supporting dentists, their families and their practices with financial planning to secure their financial future.

Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority. Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Calls may be recorded to help us provide, monitor and improve our services to you.