I also resolve to ...

... Consider regular savings plans

As The world's stock markets falter, the City's most highly-paid pundits are wondering whether share prices are about to take a sustained dive. Private investors, however, should not waste their time trying to second guess the markets; the truth is that no one, not even the professionals, gets it right all the time.

Regular savings plans - the drip-feed approach to investing in the stock markets - are supposedly the panacea for financial ills. The idea is that you invest a fixed sum each month - pounds 50, say - into a personal equity plan (PEP), unit or investment trust, personal pension or endowment policy. The sums going out are sufficiently small not to be noticed, but they can build up surprisingly quickly. Furthermore, because you are putting in money each month, you do not have to worry about investing everything just before a crash.

Emma Weiss, a spokeswoman for the Association of Unit Trusts and Investment Funds, says: "As well as the accessibility to stock market investment that regular saving gives you, by drip-feeding money into your fund you avoid the issue of market timing."

Regular saving does have its downside, however. Over the long term, stock markets tend to rise in value, so it makes sense to have as much money invested for as long as possible. Assuming that there is not a severe market downturn, you should not be looking to release funds quickly.

Regular savers must also face up to the question of charges. Index-tracking fund managers are still engaged in a price war which has enabled some investors to pick up excellent deals on PEPs. But regular savers don't always get such a good deal.

Take Gartmore and Virgin, two contenders in the index fund price war. Neither fund manager makes an initial charge and both levy a super-competitive annual charge of just 1 per cent if you hold the funds in a PEP. However, for investors who make monthly payments into either PEP, charges will rise considerably. That is because both managers charge a flat fee of pounds 2 on each of the monthly contributions, on top of the annual charge (to get Virgin to waive the fee, you first have to invest a pounds l,000 lump sum).

In other words, an investor who makes 12 pounds 50 monthly payments in to Gartmore's or Virgin's index-tracking PEP actually pays total charges of 5 per cent a year. That's much more than the bargain- basement 1 per cent so often quoted. A Virgin spokesman says: "The pounds 2 fee is there to cover the costs of collecting the direct debits." He admits that the fee increases the charges.

The extra charge is particularly damaging to small investors. Since both managers charge a flat fee, the smaller your investment, the larger the impact of the charge. Painful, when you consider that less affluent investors are more likely to have to opt for regular savings since they do not have big, lump sums to invest.

Charges can also hit regular savers hard when it comes to personal pensions. Some insurance companies will still penalise investors who vary the amount of money they pay each month. And many penalise investors who stop contributing for a period, perhaps because of the loss of a job.

None of this is to say that regular savings should be avoided, however. In reality, most people simply do not have large enough disposable incomes to make big one-off investments. As George Strang, head of research at Countrywide, the independent financial advisers' network, points out: "Savings plans do give a certain amount of discipline. A pounds 50 monthly direct debit is painless, and after a period of time you can accumulate a reasonable sum of money."

But next time your financial adviser explains that regular saving takes all the doubt out of investing, remember that life isn't necessarily that simple.

q David Prosser works for 'Investors Chronicle'.

Start your day with The Independent, sign up for daily news emails
The Queen and the letter sent to Charlie
Arts and Entertainment
Eurovision Song Contest 2015
EurovisionGoogle marks the 2015 show
Two lesbians hold hands at a gay pride parade.
peopleIrish journalist shares moving story on day of referendum
Arts and Entertainment
<b>Kathryn Williams</b>
When I was supporting Ray La Montagne I was six months pregnant. He had been touring for a year and he was exhausted and full of the cold. I was feeling motherly, so I would leave presents for him and his band: Tunnock's Tea Cakes, cold remedies and proper tea. Ray seemed painfully shy. He hardly spoke, hardly looked at you in the face. I felt like a dick speaking to him, but said "hi" every day. </p>
He was being courted by the same record company who had signed me and subsequently let me go, and I wanted him to know that there were people around who didn't want anything from him. At the Shepherds Bush Empire in London, on the last night of the tour, Ray stopped in his set to thank me for doing the support. He said I was a really good songwriter and people should buy my stuff. I was taken aback and felt emotionally overwhelmed. Later that year, just before I had my boy Louis, I was l asleep in bed with Radio 4 on when Louis moved around in my belly and woke me up. Ray was doing a session on the World Service. </p>
I really believe that Louis recognised the music from the tour, and when I gave birth to him at home I played Ray's record as something that he would recognise to come into the world with. </p>
booksKathryn Williams explores the works and influences of Sylvia Plath
Liz Kendall played a key role in the introduction of the smoking ban
newsLiz Kendall: profile
Life and Style
techPatent specifies 'anthropomorphic device' to control media devices
The PM proposed 'commonsense restrictions' on migrant benefits
voicesAndrew Grice: Prime Minister can talk 'one nation Conservatism' but putting it into action will be tougher
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?