Finance glossary
Pound-Cost Averaging
Also known as: Regular investing, Drip-feeding
In simple terms
Pound-cost averaging just means investing a set amount regularly — say each month — instead of all at once, so you are not relying on getting the timing right.
On this page
What does pound-cost averaging mean?
Pound-cost averaging is the habit of investing a fixed sum at regular intervals — for example £100 every month — rather than trying to invest a lump sum at the “right” moment.
When prices are low your money buys more units; when prices are high it buys fewer. Over time you pay an average price.
How pound-cost averaging works
By spreading your buying over time, you avoid the risk of investing everything just before a fall. It also removes the pressure to “time the market”, which very few people do successfully.
It suits regular saving from income, such as monthly pension or ISA contributions.
How could this affect me?
Investing regularly can make market ups and downs less stressful and easier to stick with. Over the long run, historically, markets have tended to rise, so staying invested matters more than perfect timing.
It is a discipline, not a guarantee — if markets rise steadily, investing a lump sum earlier might have done better. Your capital is still at risk either way.
Things to watch out for
- It reduces timing risk but does not remove the risk of loss.
- If markets rise steadily, a lump sum invested earlier can beat drip-feeding.
- Regular investing works best over years, not months.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, How to start investing (opens in a new tab). Accessed 22 Aug 2026.