I've got 6 months living expenses in Cash ISAs and am maxed out on this year's cash allowance. I also have a £50k str fund in a Nationwide bond to help towards a deposit in 5+ years time.

As well as saving my maximum annual allowance in Cash ISAs my long term plan (25 years ahead) has been to drip several hundreds of pounds a month into equity ISAs, in my case, two F&C managed funds (one UK growth, the other Europe growth). The forecasts for the stock market for the next 2-3 years are not good and I'm now nervous about continuing to drip money into a declining market.

My question is this. Taking a long term stance, does it make sense to continue to drip money into equities over the next couple of years, in a falling market, or should I try and keep all savings in cash??

Cash savings are subject to purchase power erosion (inflationary pressures). Not such a good idea for long term holdings, but great for emergency access (as you say 6 months living expenses).

Re equities, if you buy, more or less, the same equities each month and they continue to fall then at least you are reducing your average cost of purchase per unit (a std. strategy with pension funds). When the equities/funds once again rise significantly you will see gains, however not as much as if you had 'held fire' and only bought at the bottom - but how easy is it to do that?. The basic difference is that you can 'actively' manage by picking and choosing each month whether or not to buy into the funds, or do it 'passively' by always buying every month. The first method takes more time and judgement.

BTW, if this is a long (25 year as you say) plan then, even if you already have an occupational pension scheme, why not open a SIPP? (Self Invested Pension Plan) where you will get tax relief, 20% or 40% added into your fund. Unlike an equity ISA you are also not limited to £3.6k of contributions pa ('coz you already use the other £3.6k in a cash ISA). Your contrib. can be anything up to 100% of your gross income (somewhere around £200ish k pa and a £1.8M lifetime allowance, if you are lucky enough to earn sufficient for that). By the way I take it you know you can take a 25% lump sum tax free from your pension pot once you hit retirement age.

Apart from being a gold/silver bug, my own strategy is to have the SIPP for the regular drip-fed funds, an equity ISA for shorter term (2-5 years) actively managed equity purchases, and if any spare cash is around I buy equities in a standard portfolio taking advantage of the annual capital gains exemption
of self & spouse.

Basically there are lots of different ways to skin a cat - and there isn't necessarily a right and a wrong way, it just depends upon personal circumstances, risk aversion and timeframe.
Someone I know just buys Premium bonds each month !

Wow, thanks for taking the time to write that response - this is really helpful. I'm in a very good final salary pension but will definitely look in the SIPPs option. What you're saying about continuing to drip money into equities (reducing average costs per unit) has always been my understanding for long term investing, but it just seems counter-intuitive now in the current market. I suppose I'm looking for someone with a bit more knowledge than me to say that it makes sense.....

Thanks again!

I'm continuing to drip feed money into the markets. I prefer ETFs as they have low management charges. I'm long on commodities, and the IAPD.L Pacific Rim ETF - it's yielding nearly 6% now and there is the long term possibility of good capital growth.

Equities are out of favour with the big boys right now, but they will be back.