The Investment Strategy I Used Before I Knew Its Name

Welcome to Financial Fluency - your weekly guide to mastering financial English, learning how money works, and making confident financial choices.

In this issue:

• A Look at the Markets: Performance September 2025

• The Investment Strategy I Used Before I Knew Its Name

• Quote of the Day: John Maynard Keynes

• We value your feedback

• Expression of the Day: Dollar Cost Averaging

• Interactive Quiz

• Whenever you are ready, here is how I can help you

A Look at the Markets: Performance September 2025

Vanguard FTSE All-Word ETF (Accumulating)

August was a decent month for the assets we are following. The Vanguard FTSE All-World index was up a very healthy 3.28%.

 iShares Core S&P 500 UCITS ETF (Accumulating)

The iShares Core S&P 500 UCITS ETF (Accumulating) did not do quite as well as the FTSE All-Word index but still returned a good 2.73% return in August.

Vanguard EUR Corporate Bond ETF (Accumulating)

The Vanguard EUR Corporate Bond ETF increased 0.5% in August.

Bitcoin Monthly Performance $BTC.X ( ▲ 2.15% ) 

A 5.16% percent gain for Bitcoin in September, regaining most of August’s loses. Notice, October is already up over 4% but we will wait until the end of teh month to see if this holds.

The Investment Strategy I Used Before I Knew Its Name

Why investing monthly removes emotion and builds wealth

When is the best time to invest?

This is something that I have made several mistakes about in the past, but I now have a simple system. Like many good solutions in investing, I stumbled upon it through experience rather than reading about it in books. In fact, I used this strategy for years before I even knew its name.

Before we look at my strategy, let's look at my mistakes.

Mistake: Trying to Time the Market

So often in the past I have been worried that the markets are too high and 'bound to correct soon'.

While pullbacks in the market are almost certain to happen at some point, knowing when they will occur is a lot more difficult—even for the financial experts. As John Maynard Keynes said, "Markets can remain irrational longer than you can remain solvent." This led me to usually wishing that I had put money into the market earlier.

Psychologically, at least for me, missing the market go up was worse than putting money into the market before a drop.

My Strategy

I have been a self-employed person since 1991 and I have always had a strong desire to invest in the stock markets.

Because I also wanted to invest in my own business, I did not have a lot of excess capital to invest in the stock market. Saving small amounts and trying to time the market was not working for me—it just meant I missed out on gains. So, I simply decided to put money into the market on a monthly basis regardless of the price.

I later learned that this strategy is called 'Dollar Cost Averaging' or DCA.

Dollar Cost Averaging

Dollar Cost Averaging (DCA) is investing a fixed amount of money at regular intervals, regardless of market conditions. It's a strategy many investors use when they do not want to, or understand they are not able to, time the market.

The strategy has a number of advantages:

1. You automatically put money into the market, building your portfolio consistently

2. You continue investing even when markets drop, automatically buying at lower prices

3. This removes emotion from investment decisions

Let's look at a practical example.

Old Iain vs New Iain

Imagine I have €250 available to invest each month in an ETF that costs €50 per share.

Old Iain believes the markets are too high and decides to wait. Next month, the ETF rises to €60. "Definitely too high now!" thinks Old Iain. In Month 3, markets drop to €40. "Told you!" says Old Iain, but still doesn't invest, believing they'll fall further. Month 4 sees markets recover to €50, and Old Iain is convinced they'll drop again. Finally, in Month 5, with markets back at €60, Old Iain invests his accumulated €1,250. At €60 per share, he buys 20 shares with €50 left over.

New Iain takes a different approach and invests €250 every month regardless of price:

• Month 1: 5 shares at €50 = €250

• Month 2: 4 shares at €60 = €240 (€10 left over)

• Month 3: 6 shares at €40 = €240 (€10 left over)

• Month 4: 5 shares at €50 = €250

• Month 5: 4 shares at €60 = €240 (€10 left over)

The Result:

By trying to time the market, Old Iain ended up with the same €1,250 he started with—no gain whatsoever. New Iain, by simply investing regularly, achieved a 17.6% return. More importantly, Old Iain spent five months stressed about making the "right" decision, whilst New Iain automated his investing and got on with his life.

Conclusion

The practical example above demonstrates all three benefits of Dollar Cost Averaging: building your portfolio consistently, removing the stress of timing decisions, and taking emotion out of investing.

You might think the example shows unrealistic volatility, but remember the market swings during the 2020 COVID period. Even with lower volatility, the principle remains the same—DCA still works, just to a lesser extent.

The real benefit? New Iain automated his strategy and moved on with his life, whilst Old Iain spent five months second-guessing every decision.

Next week, we'll examine what you should do if you have a lump sum to invest rather than regular monthly amounts.

As always, none of this is financial advice. Everyone should invest according to their personal circumstances, risk tolerance and financial goals.

Quote of the Day: John Maynard Keynes

This famous Keynes quote captures exactly why Old Iain's market timing failed. Waiting for the 'right' moment can mean missing years of gains—the market doesn't care about your predictions.

We Value Your Feedback!

Your opinion helps us improve and lets you suggest topics or ask Business English questions for future issues.

Expression of the Day: Dollar Cost Averaging

Dollar Cost Averaging (DCA) - expression/strategy - investing a fixed amount of money at regular intervals (weekly, monthly, quarterly) regardless of market price or conditions; a disciplined approach that removes emotion and timing decisions from investing.

Context and Usage: Dollar Cost Averaging is one of the most recommended strategies for long-term investors, particularly those building wealth over decades. The term originated in the United States but is now used globally. British investors sometimes call it "pound cost averaging" when investing in pounds sterling, though DCA remains the universal term in financial contexts.

Note: DCA is particularly valuable for removing the psychological burden of market timing. By committing to regular investments, you automatically buy more shares when prices are low and fewer when prices are high, without making emotional decisions.

Common Collocations:

Dollar cost averaging strategy - the systematic approach to regular investing My dollar cost averaging strategy means I invest on the 1st of every month, no matter what financial headlines are saying.

Practice dollar cost averaging - to implement this investment approach New investors should practice dollar cost averaging rather than trying to time market entry points.

Benefits of dollar cost averaging - advantages of this investment method The benefits of dollar cost averaging include emotional discipline, consistent portfolio building, and automatic buying during market dips.

Dollar cost averaging into the market - gradually entering an investment position Rather than investing my inheritance as a lump sum, I'm dollar cost averaging into the market over twelve months.

Business Example: The company's pension scheme uses dollar cost averaging, automatically investing employee contributions on the last Friday of each month regardless of market conditions.

Investment Context: DCA is contrasted with lump sum investing, where you invest all available capital at once. Studies show that lump sum investing often produces higher returns mathematically, but DCA provides psychological benefits and protects against the risk of investing everything at a market peak. For regular savers building wealth from monthly income, DCA isn't a choice—it's the natural approach.

Interactive Quiz

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Disclaimer:

This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.

Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.