How to steer the wheel of fortune

For rainy days and splashing out, saving regularly is the best solution. Here and over the page we study the
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The Independent Online
LOTTERY winners can ignore this survey. However, saving regularly is a necessary evil for many people - something that you have to do to build up a financial cushion, and a way of reducing the pain of some big- ticket purchases, whether expensive holidays, cars, weddings, children's education, homes or a comfortable retirement.

This survey covers a range of ways of putting money aside regularly to build up a bigger sum: savings plans for unit trusts, PEPs and investment trusts, as well as friendly societies and building societies.

It also looks at mortgage repayment vehicles - ways of saving to pay off your mortgage debt - and pensions, an increasingly unavoidable savings need.

Saving regularly can be a good discipline in itself. It means that you don't blow every penny of income today, only to have to do without tomorrow or be forced into borrowing to pay for a one-off purchase.

Saving monthly can also be both a lower-risk and efficient way of investing in stock markets, in particular via unit and investment trusts. It's almost certainly not cost-effective to buy pounds 50 of BP shares a month - stock- brokers' charges will normally work out as too big a chunk of your investment.

But unit trusts and investment trusts - because their charges are normally wholly percentage-based - do not present this problem to the small saver.

The fear is that you may invest all your money just before a crash. If you save monthly instead, you will be buying shares or units at varying prices. When prices fall you get more. And because you have bought more at the lower price, then over time the average price you will have paid for your overall holding will be lower than the average market prices over the same period.

This statistical magic is called pound-cost averaging, and it is explained, with examples, in a separate article.

Of course, getting in at a better-than-average price is not the same as getting in at the best price. But that, like the National Lottery, needs a lot of luck.