Regular purchases of equal amounts

The idea is simple: buy for the same amount at equal intervals, regardless of price.

What happens

For a fixed sum a low price buys more securities and a high price buys fewer. The average purchase price ends up below the average price over the period.

What the method does not do

It does not raise expected returns. If the market rises steadily, a single purchase at the start delivers more — the money spends longer in the asset. Regular purchases lose in that scenario and win in one with a dip in the middle.

Where it is genuinely strong

In behaviour. A scheduled purchase requires no courage during a fall and no restraint during a rally — that is, it removes exactly the two decisions people most often get wrong. See Fear of missing out: why people buy at the highs.

Second, it matches how money actually appears: in instalments, alongside a salary, rather than as one lump sum.

Limitations

The method offers no protection against choosing the wrong asset. Regular purchases of a security whose business is deteriorating are a regular increase in a losing position. Diversification is mandatory here: Diversification: what it gives and what it does not.

Nor does it remove costs: frequent small trades raise the share of commission in every purchase — Fees: small numbers that decide the outcome.