Regular investing provides the opportunity to average out the ups and downs whereas timing takes on a more crucial dimension in the case of lump sum. Diversification is important in both methods, but comparatively, more so in the lump sum method. Unit trusts or investment linked plans are less volatile than individual stock investment. This variable is considered in the choice of methods. Investor Behavior A factor in investments, that seems to be paid less attention, is the attitude and emotion the investor brings into the investments.
Different people have different expectations and react differently as time goes by.
Risk tolerance, often mentioned by investment advisors, is just one part of the investor's attitude. Expectations of the investment outcome during investing must be realistic and managed. Commitment on the part of the investor is also important, especially in the regular investing method. By being clear about objectives and expectations, investors tend to stick it out through the duration of the investment plan. Anticipating money needs will elevate the problem of liquidity and thus, avoid the plan.