This week, markets gave investors another reason for fear. As Trump's latest tariffs sparked yet another bout of volatility, it's easy to think: maybe now isn't the right time, maybe wait until things settle.
I spent roughly a year thinking exactly that, except my excuse wasn't tariffs but a house purchase. To prepare, I sold some investments and left the proceeds sitting as cash in my ISA. And in theory, it was the right call, as you don't want your deposit evaporating in a correction the week before the exchange. Per standard financial advice: if you need the money within a year, the time horizon is too short to risk it in markets.
The problem was that I had moved too soon. What I thought would take a couple of months took more than a year because apparently, in the UK property market, nobody is ever in a particular hurry. As months passed, my money sat in cash, earning 4%, feeling very responsible, while markets went up. A lot. I felt fear and FOMO at the same time, which is an unpleasant combination.
The other mistake, I think, was not being clear enough about what each pot of money was actually for. The deposit funds needed to be safe. But not everything I had was earmarked for the deposit – I just treated it all the same way, which in hindsight was lazy thinking dressed up as caution.
What it actually cost me
Still waiting for the purchase to complete, I decided I didn't want to stay out of markets any longer. I don't want to touch the deposit, just build a separate pot back up. So I set up a £10 automatic daily trade into a tracker (the price of a coffee and a small pastry in London these days), which made it hard to argue I genuinely couldn't afford it even during the most uncertain months.
Which raised an uncomfortable question: could I have been doing this all along?
To make it concrete, £10 a day over a full year is £3,650 invested. Because contributions drip in gradually rather than all at once – pound cost averaging, in the jargon – your average pound isn't exposed for the full year.
This is one of the things that makes regular investing less daunting than it sounds. Because you're not timing the market with a lump sum, you're spreading your entry point across hundreds of days. If markets dip in month three, you're buying cheaper units. If they rise, your earlier contributions benefit. The idea is that your average pound is invested for around six months, capturing roughly half the annual return.
Here's how that plays out — and how it would have looked in 2022, which was a genuinely bad year for markets:
| Index | 2025 pot value | 2025 gain/loss | 2022 pot value | 2022 gain/loss |
| Cash (4%) | £3,723 | £73 | £3,723 | £73 |
| EuroSTOXX | £4,110 | £460 | £3,437 | -£213 |
| FTSE All Share | £4,088 | £438 | £3,656 | £6 |
| FTSE Japan | £4,106 | £456 | £3,586 | -£64 |
| MSCI World | £3,987 | £337 | £3,357 | -£293 |
| S&P 500 | £3,968 | £318 | £3,312 | -£338 |
| Nasdaq | £4,036 | £386 | £3,056 | -£594 |
Source: Trustnet
The 2022 column is worth thinking about. Nasdaq investors drip-feeding £10 a day would have lost nearly £600 that year. S&P 500, down £338. Cash, up £73.
The case for caution in a year like that is strong, and pound cost averaging at least softens equity losses, since later contributions buy in at lower prices. But you don't get to know in advance which year you're in. And in 2025, that same cash row earned £73 on £3,650 while almost every index added hundreds.
Incidentally, Trevor Greetham, manager of the Royal London multi-asset fund range, recently made the case to me for why younger investors are often better positioned to take risk than they think:
"For younger investors, higher risk can be quite sensible – they usually don't yet have a large pot of assets, so it matters less if they lose some money early on, while the benefits of compounded growth over time matter more. Almost all of the value of a future pension pot comes from money that hasn't been invested yet. If you're a young investor starting with an empty pot, it doesn't matter much if you lose the first year's contribution, because you still have decades of contributions ahead of you."
It's a point about long-term investing, but the underlying logic applies more broadly. When the pot is small, the downside is limited and the upside, given time, is significant. I also heard this phrased as: You can only lose 100% of what you invest. My pot is small right now, partly by design, because a chunk of it is now going towards a flat. What I do in the next year matters much less than what I do in the next 30.
The £10 a day will probably come down – I still need furniture and life has a way of making financial plans look optimistic. But the rule I've set for myself is: reduce the amount you invest if you must, never stop altogether.
Matteo Anelli is deputy editor at Trustnet. The views expressed above should not be taken as investment advice.