PAC: Capital Accumulation Plan explained simply

Imagine deciding to invest €100 a month in a global ETF. Each month that €100 buys fund units at a different price: when markets are high you buy fewer, when they're down you buy more. Over time, the average purchase price flattens out.

This effect is called "dollar cost averaging", or averaging your purchases. It doesn't guarantee gains, but it reduces the risk of having invested everything right at the most expensive moment.

The main advantage is discipline: by automating the investment, you avoid having to decide every time whether "it's the right moment". The right moment almost never exists, so entering gradually helps you stay consistent.

The limit is that if the market rises steadily, investing everything at once would have paid off more. But no one can say whether the market will rise or fall in the coming months, and a PAC exists precisely so you don't have to guess.

It makes sense when you have a long horizon (at least 5-10 years) and a small amount to set aside each month. You don't need a large sum: even €50 a month, kept up consistently, can make a difference.

It doesn't make sense if you might need the money soon, if you don't have an emergency fund, or if you can't tolerate even small temporary losses. Before starting a PAC, make sure your foundations are solid.