Regular Savings

Saving on a regular – usually monthly – basis is an easy way in which to build a nest egg. This can be into a simple savings account or into an investment fund.

Regular monthly savings are also a good way of reducing the risks involved with investing in shares, because you benefit from what is known as "pound cost averaging". If you invest the same amount each month in a share fund, it follows that you will be allocated more units when prices fall and less when prices go up. The total holding will therefore be made up of more units bought when prices were low than when they were high, which will boost the average return over the long term.

Setting up regular savings over a long period removes to a large extent the danger of guessing when a share price is at a low or high point. You might lose out from not investing fully when the price is low in order to make a substantial capital gain, but you won't risk buying all of your shares at the top of the market.

Regular savings should therefore be most concerned with selecting the right fund or SHARESSHARES
If you own shares in a company you are a part owner of the company, entitled to vote at annual meetings and benefit from the company’s profits. These are distributed in the form of a dividend. to provide a good return over the required time period. For example, if you are taking a long-term view, to boost your retirement income you could gamble on a higher risk sector that may well yield a much higher return.

Most fund management companies offer regular savings plans, often starting at £50-£100 per month. Investment trusts, which are effectively funds listed on the stock market, are particularly good for long-term regular savings as the dealing costs are normally very competitive. A UNIT TRUSTUNIT TRUST
An investment contract which invests in a variety of different stocks and shares and is divided into units which are issued to its members instead of shares. or OEIC (OPEN ENDED INVESTMENT COMPANY)OEIC (OPEN ENDED INVESTMENT COMPANY)
A managed fund which holds a portfolio of investments which you can buy into. OEICs issue shares instead of units, and normally quote a single price for buying and selling. may also offer the option of making regular monthly investments, instead of a lump sum payment.

With so many options available to you, impartial independent financial advice is vital. Contact us to arrange a free initial consultation to explore all the opportunities.