What does "systematic investment" involve?

Systematic investment involves regularly investing a fixed amount over a period of time, often referred to as dollar-cost averaging. This approach allows investors to contribute a consistent sum, regardless of market conditions. By doing so, they can reduce the impact of volatility since they buy more shares when prices are low and fewer shares when prices are high. This strategy can help to build wealth over time without the need for a large initial investment or the stress of trying to time the market.

In contrast, investing a lump sum involves placing a large amount of money into investments all at once, which can expose the investor to higher risk if the market declines shortly after the investment is made. Options focused on high-risk ventures or withdrawing funds for other investments do not align with the principles of systematic investment, which emphasizes consistent, long-term contributions.