This process also removes the worry of investing at the wrong time – especially important for investors who do not have the expertise or time to analyse market movements.
Although this means they may miss out on the higher growth that investing a lump sum for the longest possible period of time helps to achieve, it offers a higher degree of safety.
Chris Spear, managing director at Spear Financial, says the majority of his clients use the drip-feeding method and adds it is the perfect tool for investors who want to use their full ISA allowance this year.
"Drip-feeding is a major strategy for me and one I use for a lot of my clients," he said. "This is especially the case at the moment as markets are feeling quite generous."
"One hopes that the FTSE will break 7,000 at some time this year but markets will never go up in a straight line and we can expect further shocks along the way."
"The current annual ISA allowance is £11,500, which comes out as £960 a month. I think it is a supremely sensible option to invest that money by drip-feeding."
"I have seen many people talking about the idea of selling in May, which I usually agree with, but it isn’t the case every year."
"Investors just have to be positive looking forward. I always think that with drip-feeding, investors love a jolly good market crash as they will reap the benefits."
"Of course, markets need to recover for that to happen," he added.
Spear points to the benefits of pound/cost averaging, something that can only be achieved by regularly drip-feeding money into markets.
This means buying units at differing prices during market movements.
If the price of the fund’s underlying holdings were to fall, then the amount of units the investor buys increases.
As a result, investors avoid the hassle of timing the market and can cover themselves during periods of volatility; however, it also means they can miss out on higher returns.
"Pound/cost averaging is a mathematical approach that actually works," Spear continued.
"Effectively, you are buying a specific number of units, during a good month you buy fewer units and in a bad month you buy more."
"The net effect is that you are buying the average. Generally it means you should be better off than if you were to invest one amount at any specific time as you negate market timing. Very few of my clients have lost money drip-feeding."
"Of course, if markets were to go up in a straight line you would be better off investing a lump sum, but they very rarely do that," he added.
Spear is a big proponent of using multi-asset funds. He says he likes Newton Managed Income and Threadneedle Managed Income for investors looking to filter in their capital.
However, he says his first choice would be Newton Managed as it is ideal for drip-feeding money into.
According to FE Analytics, FE Alpha Manager Christopher Metcalfe’s £1.3bn fund has returned 135.07 per cent over the last 10 years.
A minimum investment of £1,000 topped up with £250 pounds each month over the last 10 years would be worth an additional £14,172.02 on top of the £31,000 the investor would have already put into the fund.
£1,000 investment in fund topped up with £250 each month
Source: FE Analytics
Of course, if the full £31,000 was invested in the fund 10 years ago, it would now be worth £72,872.32p.
However, the main attraction of a drip-feeding approach is the discipline of investing a smaller amount of money at regular intervals, allowing those who do not have the luxury of investing £31,000 in one go the chance of decent returns.
Spear says that because of this, more conservative investors can gain access to more volatile areas of the market.
"The net effect of drip-feeding and pound/cost averaging reduces the element of risk. This means that logically you can afford to accept a higher risk strategy in your portfolio."
"In theory, you could look to hold more specialist funds or emerging market funds if you believe that that strategy will work."
"Even if you are more of a cautious or balanced investor, in effect you are getting access to higher growth areas with lower risk."
One of the highest-risk areas of the market in recent times has been the mining sector.
For example, FE Alpha Manager Evy Hambro’s BlackRock Gold & General fund has produced high returns in the long-run.
Over 10 years, the fund has made 176.1 per cent, but over one, three and five years the fund’s losses have been more than 20 per cent.
The fund requires a minimum investment of £500 and a minimum top-up of £100. If this money had been drip-fed into the fund over 10 years – the initial £500 and then £100 each month – it would have made £7,584 profit on top of the £12,500 outlay.
If that £12,500 was invested in the fund 10 years ago, it would now be worth £34,512.87.
However, if it was invested in the fund five years ago, it would now be worth just £9,736.39.
Investors who drip-fed money in over five years would still have lost money, but would be down just £265.78.