Modelling recently commissioned by Vanguard on the impact of investment decisions highlighted why investing regularly and managing costs are proven investment strategies to grow long-term wealth.

Vanguard has long recognised the benefits of regular investing, which is why we’ve now launched Auto Invest, an automated regular investment feature for managed funds on our Personal Investor platform to make regular investing easier for our investors.

This new feature will provide investors with the ability to set up regular investment amounts from $200 either fortnightly, monthly or quarterly, into one or a range of Vanguard managed funds.

To cement the importance of regular investing, modelling recently commissioned by Vanguard on the impact of investment decisions and the importance of focusing on investments factors within our control highlighted why contributing consistently and managing costs are proven investment strategies to grow long-term wealth.

The modelling looked at three individual scenarios with three different life goals (pictured below). Each individual is invested in a broadly diversified asset allocation (represented as 70% growth assets and 30% defensive assets) across a defined time period.

While the scenarios had different variables (i.e. goals, time-frame and size of regular contributions), the modelling showed that if all three scenarios moved from an annual investment contribution of 1% and industry average fees of 0.85%, to a higher contribution of 4% and the lower Vanguard average fee of 0.29%, then there would be a significant positive impact on their investment returns.

While it’s no surprise that the more money you contribute, the greater your returns, the modelling actually shows that the increase in final investment value (after each individual has maximised regular contributions and lowered their investment costs) represents far more than just the extra money they’ve invested along the way.

In fact, the lower fees and compounding investment returns through the respective investment periods delivered between 45% and 85% of the final investment values.

This shows that regardless of what markets are doing, investors can still meet their investment goals without adopting more risk if they focus on controlling the things they can: setting a diversified asset allocation, investing regularly, and keeping a watchful eye on costs.

The above is a short summary of the modelling conducted. For the full research report and more detail on each scenario, please see here.

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