Of course, the ISA is still 15 months away, leaving Tessas and PEPs as the main tax-efficient savings available to everybody. In fact, even if you don't yet have a personal equity plan it is still worth starting one now. Try not to be seduced by the kind of advertising which suggests you should: "Buy now, while stocks last!" But what sort of PEP should you have?
It is all too easy to become completely submerged in conflicting claim and counter-claim of performance. Here is some food for thought: the annual fees charged by the average fund manager can swallow as much as 33 per cent of a unit trust PEP's income. This means the income tax saving made by investing in a PEP may be wiped out by the annual charges alone.
It has been said many times that an index tracker fund should form the core of a private investor's portfolio. However, only one of the various tracker funds on offer has taken advantage of the Internet and the savings it can offer in terms of costs and administration, netPEP.
netPEP tracks the FTSE 100 index through a unit trust managed by the world's leading tracking fund managers, Barclays Global Investors. Since its launch in April, the netPEP Tracker Fund has risen by around 16 per cent, broadly in line with the performance of the FTSE 100 over the same period.
Among the advantages of investing on the Internet through netPEP is the ability to value your investment at any time just by logging on to the service. Although netPEP keeps in contact with regular e-mail communications, important documents such as confirmation of units purchased are sent by post.
Once you invest, netPEP sends you a confidential password and user name so that you can check your portfolio's value over the Internet and access netPEP's investor information service. This offers information on the companies in the portfolio, including links to their websites and a forum where you can, for example, put forward questions you want raised at company meetings.
You have the option of investing in netPEP via a new PEP, the transfer of an existing PEP or directly into the unit trust. There is an initial 1 per cent charge and the annual management fee is 0.35 per cent, making netPEP among the cheapest of the tracker funds on the market. The 1 per cent initial charge is waived on all investments of pounds 25,000 or more. The minimum investment in either a PEP or the unit trust is a pounds 1,000 lump sum or monthly savings of pounds 250.
Although netPEP offers its application form on-line, it does not accept applications by e-mail. Once you have filled in the form, you must print it, sign it and return it to them by post, either with a cheque or a direct- debit mandate.
As a Christmas come-on, netPEP is waiving its initial charge for all PEP transfers until 31 December. This means investors transferring to netPEP will only be charged the annual fee of 0.35 per cent or pounds 3.50 for every pounds 1,000 invested, making it the cheapest PEP on the market.
In addition to the netPEP itself, the netPEP website offers Tr@cker, a monthly on-line magazine providing analysis and commentary on the FTSE 100 index. Among the articles in the latest issue are a review of the current shape of the UK stock market and commentaries on the South-east Asian economies and the lessons of the crash of 1987. The magazine's regular features include a monthly commentary and price and performance information about the netPEP itself.
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