The one financial resolution you really need for 2026
David Prosser explains the advantage of setting up regular savings into the stock market.
David Prosser explains the advantage of setting up regular savings into the stock market.
Britons love making financial New Year’s resolutions. Research from YouGov suggests resolutions related to personal finance are right up there with losing weight and drinking less on people’s priorities for 2026. Not everyone will achieve all their goals, of course, but the good news when it comes to saving is that there is really only one thing you need to do to keep your promise to yourself.
That simple step towards a more prosperous future will take you no more than five minutes. All you need to do is to set up a regular standing order that directs cash from your bank account each month into the savings vehicle of choice. Decide how much you can spare each month and then decide where you want that money to go.
Investing a fixed amount of money each month can smooth out some of the ups and downs that are inevitable with many investments.
David Prosser
Why is this such a powerful trick? The most important point is that it automates your savings habit. You don’t have to remember to pay money into your savings – your standing order will be executed every month until you do something to put a stop to it. In other words, you’re making a virtue out of apathy – most people take ages to get round to financial decisions or changes of direction.
A second benefit of automated regular saving is that it takes all the guesswork and anxiety out of investment decisions. When people are thinking about investing, they inevitably worry about market timing; they fret that they’re buying when prices are too high, for example. This often puts people off investing at all, even though market timing almost never has a significant impact on investment outcomes if you’re focused on the long-term. If, on the other hand, your money automatically leaves your bank account on the same day each month, you never have to think about timing the market.
This brings us on to a third advantage of regular saving. Investing a fixed amount of money each month can smooth out some of the ups and downs that are inevitable with many assets. This is due to a statistical phenomenon known as pound cost averaging. In simple terms, if markets are falling, your fixed monthly payment will go further; this will help your investments rebound more quickly when markets recover. The same effect applies in reverse too, but overall, pound cost averaging should reduce volatility.
None of which is to tell you where to direct your monthly standing order – that will depend on your individual needs and your attitude to risk.
Still, if you can put money away for the long term – five years or longer, say – it makes sense to look for assets with the potential to deliver outsized returns, even if this means accepting the possibility of some bumps along the way. In practice, that probably means exposure to the stock market, which has historically tended to outperform cash over longer periods. But don’t overlook other asset classes – areas such as property, infrastructure and private equity could all be happy hunting grounds for long-term savings while also helping you to avoid putting all your eggs in one basket.
And, of course, investment trusts are an excellent way to access all these areas, with a professional manager taking day-to-day responsibility for exactly where to put your money to work, and an independent board of directors making sure the trust is run in shareholders’ best interests.
The good news is that online investment platforms make it easier than ever before to set up regular savings plans. They’ll all allow you to save this way – requiring only modest monthly contributions – and to change your investments as you see fit.
David Prosser
David is former Business Editor of The Independent, Personal Finance Editor of the Daily Express, and Deputy Editor of Money Observer magazine. He writes regularly for the AIC.
