Sam North, market analyst at eToro, joins Sammie for this Money Moments short to break down why patient, long-term investors keep coming out on top, and how dollar cost averaging turns market dips into buying opportunities rather than reasons to panic.
This week’s Money Moments is a short, sharp one. Sam and I get into the habit that quietly builds wealth over decades: adding to a spread of index funds every single month, whatever the headlines are saying.
We talk about why the stock market has finished up in roughly 70% of years historically, why the scariest drops are often followed by the strongest recoveries, and why missing the best days in the market can wreck your long-term returns far more than sitting through the worst ones.
If you’ve ever panicked at red numbers on your portfolio and wondered whether to sell, this one’s for you.
———
Gains App is LIVE!
An AI-powered budgeting and cashback app designed to help you make more of your money.
Download here: https://gainsapp.onelink.me/8IhT/oiaimr1z
———
Get a FREE FRACTIONAL SHARE worth up £100 when you deposit £1 with Trading 212
https://www.trading212.com/join/MGP
If you don’t receive the free fractional share, head to the menu and put the word ‘MGP’ into the promo code section.
(Capital at risk when you invest)
Key takeaways
- Consistent monthly investing into a spread of index funds, rather than trying to time the market, is the strategy Sam describes sticking to since 2014.
- Historically the market has finished up in roughly 70% of years, and Sam notes it was up “94% over the last five years.”
- Dollar cost averaging (buying a fixed amount regularly, whatever the price) removes the psychology of trying to time market swings.
- Big drops of 5-10% can be used as deliberate buying opportunities for long-term investors, though this needs a long time horizon to be appropriate.
- As you get closer to needing the money (retirement, for example), reducing exposure to equities and adding more stable assets like bonds becomes the sensible move.
Timestamps
- [0:18] Tool: Building a Monthly Investing Habit
- [1:45] US Stock Market Historical Win Rate
- [4:55] Buying the Dip: The Psychology
- [6:36] Tool: Dollar Cost Averaging Explained
- [8:10] Tool: Buying the 5% and 10% Drops
- [9:25] Portfolio Rebalancing Near Retirement
- [10:27] Staying a Long-Term Learner in Markets
Why the long-term investing mindset wins
Sam’s approach is refreshingly unglamorous: buy a series of ETFs tracking major indexes every single month, “never ever taking profit.” He’s been doing it since October 2014, adding more when the market drops and lumping in extra cash when the drop is bigger. It sounds simple because it is. The hard part is sticking with it when your screen turns red.
That’s where the numbers help. Sam points to market history: over the long run markets have recovered from every crash so far, and he notes that it was “94% over the last five years.” Nobody can promise that pattern repeats forever, but it’s the kind of evidence-based long-term case that makes a compound interest calculator worth playing with: small, regular contributions add up more than most people expect once time and average market growth are factored in.
If you’re building this habit from scratch, our guide to investing for beginners in the UK walks through the basics before you commit real money.
Dollar cost averaging and buying the dip
The core tool Sam and Sammie discuss is dollar cost averaging: rather than dropping a lump sum in at once, you split it into regular monthly buys. As Sam puts it, “you’re just averaging into that position” and it “takes out the psychology of trying to time the market.” For newer investors especially, this is a far less stressful way to build a portfolio than trying to call the bottom.
Sammie takes it a step further on the episode, adding more when the market’s down that month and holding back a little (in cash) when it’s up, ready to deploy on the next dip. Sam’s version of the same idea: when the market drops 5% or 10%, “that’s where you go in.” He’s careful to add the caveat that this only works if your time horizon is long, saying plainly that someone close to retirement shouldn’t have the “majority of your portfolio in equities.”
Most UK investors will build this habit through a low-cost investing app or platform, so it’s worth comparing options in our best investing apps UK roundup, and if index funds specifically are new territory, our piece on how to invest in index funds covers the fundamentals in more depth.
Learning from mistakes and staying invested
Sam is honest that some of his “biggest mistakes” have come from selling too early out of fear, citing Apple, Meta and Amazon positions he exited after a 20% drop, only to watch them climb far higher over the following years. It’s a useful reminder that reacting to short-term red numbers can cost more than riding out the volatility, provided the investment thesis and your time horizon haven’t changed.
Before you commit to a strategy, it’s worth checking your own risk appetite and goals are actually aligned with a long-term, buy-and-hold approach. Our free investing checklist is a good starting point if you’re not sure where you stand.
This transcript is auto-generated and lightly edited for readability, it may contain errors.
[0:18] Sam North:
The main thing that I do without fail every single month is add to uh you know a series of ETFs. So for indexes? Indexes, yeah. So ones that track the S&P 500, ones that track uh the NASDAQ uh China for my sins as well.
[0:35] Sammie Ellard-King:
And it’s had a little bit of a resurgence. I’ve gone from I was very happy because I held on to my Chinese holdings.
[0:42] Sam North:
I was like, hopefully they bounce back one day. You know, I’m for two years, okay. I’m gonna keep buying it going lower. At some point, you know, they’re actually gonna stick with their stimulus plan and they haven’t it’s recovered.
[0:52] Sammie Ellard-King:
I was like my Alibaba shop back up the other day. I was like, yes, yeah, exactly.
[0:57] Sam North:
It’s still ridiculously down. Yeah, no, I mean yeah, from a few years ago, yeah, incredibly low. So yeah, every month we do that. Um and uh the plan is to hold that till I retire, never ever taking profit. I mean, I started buying the S&P 500 or the SPY or whatever you want to call it on uh the ETF, load different versions of it. Um started buying that October 2014 every single month, never ever taking profit. If it drops five percent, I’ll lump in. If it drops 10%, which is super rare, whatever I can get my hands on, I’m gonna lump in. And if you get an opportunity like COVID, then yeah, I just want to load in as as much as I can if I can. Of course, not everyone’s got the funds to do that at the time, but yeah, statistically, you know, the S&P, what is it, 70% of the years it finishes up, average about 10%, you know. So it’s uh history.
[1:45] Sammie Ellard-King:
It’s 94% over the last five years, I don’t know. It’s a dope, isn’t it? Which is mad.
[1:50] Sam North:
Yeah, incredible.
[1:51] Sammie Ellard-King:
And and that’s with like a pretty savage year in 2022.
[1:54] Sam North:
2022 was tough. 2022 was tough, and this year is just incredible. You go back to August when um you know Japan sort of shot the markets when they sort of maybe moved a little bit more hawkishly with their interest rates rather, you know, rather than what we’re seeing here where you we we’re going down, Japan might be going up. That spooked the markets, and we had like a Monday where everything came under pressure. Yeah, that was and you think, okay, well, actually, maybe for the rest of the year it’s gonna be bad. Yeah. No, but by a couple of days it’s all recovered.
[2:21] Sammie Ellard-King:
The news was like three trillion wiped off the stock market the next day.
[2:24] Sam North:
It was like, oh three trillion put back on. Yeah, yeah. So yeah, I mean it’s uh more and more people are investing now as well, and then you’ve got the 401ks which are buying into it every single month.
[2:34] Sammie Ellard-King:
Which is so passive.
[2:36] Sam North:
Yeah, yeah. So I I don’t see how people could be in the long term, you know, bearish on on US stocks. China I really interesting. Yeah, I mean uh d you just have to look at the you know the history in China.
[2:51] Sammie Ellard-King:
Does the debt levels not worry you? No. Really? No, not long term though. Why is that?
[2:55] Sam North:
I’m I just you know, the the most I this isn’t me saying you aren’t gonna get a period where for two years it doesn’t go higher. Okay. But I’m saying in 10, 20, 30 years, I mean I just just to the moon. I really do believe the most, you know, the biggest companies uh their innovation’s insane. Yeah. I th and you know you can get you know everyone selling themselves up for that, are they? You know, you you could you could do a podcast with someone where they talk about why they don’t like the US. That’s all public knowledge, all the reasons they would give, and we’re still trading where we are. You know, look what happened in Lovey Said in August with the uh the thing the market goes down, but guess what it does? It goes up. I know you know, and whoever wins the election, you might get a little bit moved lower based on you know certain things that they’ve said in the build-up. It’s temporary. Yes, temporary. And I’d uh you know, I I do believe that China will recover to its all-time high at some point. I couldn’t tell you when, because it’s it’s it’s tough out there. I need to hear that, so yeah, yeah, yeah, exactly. I’m sure there’ll be people thinking, yeah, go on, yeah. Me too.
[3:51] Sammie Ellard-King:
To be fair, it’s such a minute’s part, but it’s like one of the only parts that are in red right now.
[3:56] Sam North:
Yeah, yeah. I mean, I I like I say I was building up for every month for a couple of years, and it was down, you know, sort of twenty-twenty-five percent, and then suddenly within a couple of days it’s back to break even. I’m thinking, here we go. But also I’m thinking, damn, I wouldn’t have minded a few more years of it going lower to buy lower down to dollar cost average in for it to to go up, you know.
[4:15] Sammie Ellard-King:
I was just so worried about that whole like you know, clamp down on those big, big businesses.
[4:20] Sam North:
Yeah, that’s the thing we’re trying, you never know what’s around the corner, and suddenly a headline comes out like that, and then your your big companies there come under pressure. Um you know, LVMH, the fashion brand, said yesterday that they’re they did like a survey or whatever, and they said sentiment in China for sort of luxury brands and all that is the lowest it’s been since the pandemic. So there’s still a lot of bad news out there. However, you know, sometimes when you get this really bad news, all it takes is less bad news and we can recover. So you know, it’s almost like you want things to yeah, you want things to be bad for for then things to be the opportunity to to buy.
[4:55] Sammie Ellard-King:
You mentioned about buying when things are down. Yeah. How important is that for you and how is it how easy do you feel like that is for someone listening to this to actually implement themselves?
[5:06] Sam North:
First time it happens, it’s tough. It really is because you’re you’re you see red on the screen or your portfolio, whatever it might be, and you sort of panic a little bit, don’t you? You think, okay, well, this is the end of the world. The worst thing to do, especially if you’re look, if you’re leveraged up, then it’s tough because you know the losses are gonna be amplified either way. But if you’re you know just trading in the s you know spot market, respectively, yeah, or even just buying a fund. Or just buying a fund, then you just gotta you’ve gotta take a step back. And experience obviously is is is key here, but look at history. You know, look at the biggest also stocks in the world. I mean Amazon is up hundreds of thousands percent since the millennium. It’s had so many periods where it’s dropped 10, 20, 30, 40 percent at a time, and look how it you know cut it recovers. So I think understanding history is is key and the stats behind all of that, but there’s also and I won’t be able to quote this well, but I think it’s if you miss the 10 best days of the stock market, um, you know, your performance is significantly lower, those 10 best days most likely come after a significant drop. So it’s almost like when you get that big move lower, okay, this is my time to go in. And you know, if you’re longer term, who cares? Just put it in, don’t look again for a week.
[6:18] Sammie Ellard-King:
Yeah, the first time you do it, you’re like, What am I doing? Yeah, everything out of your being saying don’t do it, yeah, and then you see it go well, and you’re like, Well, I’m doing this every time, and you you just become numb to it. Yeah, um, so it is about that sort of initial dip you’re dying.
[6:36] Sam North:
And and and also that you’ve got to have the understanding as well, it could go lower. Yes, it could go lower for another week, could go lower for another month. But if you’re dollar cost averaging, you okay, well I’m buying lower down. Yeah, and also, you know, it’s important to say to be diversified as well. And what is dollar cost averaging for the average person? I mean, let’s just take, I don’t know, say the FTSE 100, for example. Let’s say there’s an ETF that tracks that, and we say, rather than just let’s say 10 grand, you’ve got 10 grand, which would be nice, wouldn’t it? You say rather than just go 10 grand to buy that fund right now, I’m gonna divide it by, you know, whatever, and do like a grand a month instead. So as the market goes ups and down, has its edge ebbs and flows, you’re just buying, let’s say, on the first of the month, it could be that you do it quarterly or whatever, and you’re just averaging into that position, and maybe that’s the way that people choose to do it. It takes out the site, the uh sort of the volatility of it all, the psychology of trying to time the market. Timing the market is very, very tough. Whereas if you say to yourself, I don’t care where it’s trading, I’m just gonna average myself in, then you know you can you can sort of benefit from that. And I think certainly for for newer investors is not a bad way to go about it at all. You know, I’m experienced and I still do it, so yeah, yeah, you know.
[7:45] Sammie Ellard-King:
I take it just to one little step further, and that’s like if it’s gone down this month, then I’ll add more. Yeah, great. Absolutely. And then if it’s if it’s up, then I’ll add less.
[7:55] Sam North:
A little bit less, yeah.
[7:55] Sammie Ellard-King:
And then if it’s up, then I’ll add the less I add, I still put the same amount in, I just leave that in cash. Yeah, and then just wait for the little dips, and then I’ve got that ready to play with. Absolutely. Usually kind of works out, but and overall that’s just allowed me to get much better average. Yeah, exactly.
[8:10] Sam North:
Yeah, and I and and and and then for those people like you said that want to take it a step further, when it does the 5%, when it does the 10%, that’s where you go in. You know, and if you you did you if we think over the last 20 years, you go COVID, you go maybe the Eurozone debt crisis 2011, you go Trump and Brexit, and then the dot-com, you know, they’ve had five times now where it’s gone down big time. Yeah, and it’s up hundreds percent since all of those, you know, multi-hundreds in some cases.
[8:36] Sammie Ellard-King:
Well, it’s even like earlier this year, it’s like five, six percent in a couple of days, and everyone was freaking out. It was August, wasn’t it?
[8:42] Sam North:
Yeah, yeah.
[8:42] Sammie Ellard-King:
And it is like, you know, let’s go. Yeah, yeah. I was like Christmas.
[8:47] Sam North:
I had so many mates message me and I just tweet them, or message them back and be like, let’s go shopping, and then you go down a a week or two weeks later, and they’re like, damn, I should have bought more. And you know, I I said to them, there’s always the chance it goes lower, this, that, and the other.
[9:01] Sammie Ellard-King:
But yeah, it’s uh it’s it’s a thing where history helps, you know, and understanding that and experience, but and just to be clear for everyone listening to this, like it this could all tail off and it could have a horrible crash in two weeks’ time and and all of this, yeah. But then for someone like us, we’re ready to go again because our time horizon is so long. But if someone’s like 62, yeah, that’s a big problem.
[9:25] Sam North:
Yeah, absolutely. And and I think as you get closer to a point where you might say, Look, I need to retire or I’m gonna need these funds for whatever it might be, you know, go going, you know, the majority of your portfolio in equities or stocks is not the right thing to do. No. It might be you say, Okay, I go down the route with dividends or government bonds, yeah. And and that’s you know, that’s you chaining up your portfolio to meet your needs, which is something important to to do. If you’re young and you’re saying, Well, I’m gonna hold this till I retire, okay. Well, let me load up in in things that I’m happy to hold for 20, 30 years, regardless of what happens over a one-week period. And I think again, that can be quite tough if you see red and your I mean some of the biggest mistakes I’ve ever made is selling a stock too early because of that at the beginning. You know, there’s I mean, I’ve at times I’ve had in my portfolio Apple, I’ve had Meta, I’ve had Amazon, and I’ve you know, they’ve I’ve taken big half decent wins on them, but they’ve come under pressure where they’ve dropped, say, 20% from the high. Oh, this is over, I get out, and then you know, this is years ago now, so think of how much they’ve you know gone higher in the last sort of eight years and held. Imagine if I just held. Yeah, yeah, I know, I know.
[10:27] Sammie Ellard-King:
Well you do beat yourself up, but you say we I just see it as a never-ending learning experience.
[10:32] Sam North:
That’s why I I love the love working in markets because never, you know, never-ending learning experience, but also there’s just always something new happening, some new area in the market, AI, Bitcoin, you know, crypto, yeah, whatever. There’s always something new.
[10:46] Sammie Ellard-King:
Exactly, you know. Yeah, and tech, it’s just like never ending. It’s incredible. Sub niches of it coming out of nowhere, and it’s like, wow.
[10:53] Sam North:
Yeah, I mean, what is it was it on the weekend or weekend before or during last week where Tesla had their whatever day they call it, and suddenly you’ve got robots making martinis and all of this. Everyone’s gonna have a personal assistant soon, aren’t they? So you know, they’ll be making the decisions for you.
[11:07] Sammie Ellard-King:
But yeah, I I can’t to be honest, I’m quite I’m I’m into it.
[11:12] Sam North:
I’ll sell I I’m I apparently they reckon once they’re mass-produced, they’ll be between sort of twenty and thirty thousand dollars. If I could get one of them to be my golf caddy, you know, teach me how to play golf, carry my bags, sold. I mean, that’s like that’s worth way more money than that. Yeah, yeah, and then cook for me as well, and you know, all of that stuff. Yes, sign me up for a rank.
[11:34] Sammie Ellard-King:
No, that’s it, yeah.
[11:36] Sam North:
Yeah, no arguments, turn you off.
[11:40] Sammie Ellard-King:
Oh mate, love that. Yeah, but 30 grand, yeah. I suppose in an upkeep, it’s not a bad investment.
[11:46] Sam North:
Yeah, I don’t think so. Yeah, and over time they’ll get cheaper as well. Yeah, scary and scary, yeah, but you just gotta go.
[11:52] Sammie Ellard-King:
You just see iRobot like flashing about, don’t you?
[11:56] Sam North:
Like them just Well, there are there are some people that reckon within 10 years no one will be working, you know, because of what AI, yeah.
[12:02] Sammie Ellard-King:
Yeah, I don’t believe in robotics, yeah. I I yeah, I I’ve come across like um a few, like I I get really geeky with these like three-hour deep dives into this. Yeah, because I think it’s just quite like it’s just so interesting because it’s gonna change the world, right? Yeah, yeah, yeah. Um, but most of the predictions are like 15 years, that’s when we’re gonna see like significant change to society. Yeah, yeah. Because of the um like mainly because of biology, so there’s gonna be like a lot of um changes to the way we eat food, the way we interact, healthcare, and then obviously impacted by AI and technology as well together, it’s just gonna be like a complete transformation.
[12:44] Sam North:
Yeah, it is. I I th I think you’re right in that sort of ten, fifteen year period people will look back and be like, God, we lived like that. Yeah. You know, whether that means whether they’re saying that it’s a good thing or a bad thing, we’ll have to wait and see. But yeah, yeah. I think it you know, it’s the best time ever to have ever lived right now. 100%.
Frequently asked questions
———
Get your FREE Money Action Plan
Take Our Quiz Now
Take Our Quiz Now
