Most regular saving plans allow you to invest through standing order or direct debit. However, there are no rules to say you can't increase or decrease your monthly amount, subject to minimum investment levels, or even delay it altogether at expensive times, such as Christmas or when you're paying for a holiday.
This makes the schemes extremely flexible. Costs are low because scheme managers generally negotiate bulk-buy rates. They collect all the monthly buying orders from investors and put them through as one large deal to save money. Charges vary between the groups. Many have no charge when you buy but a minimum pounds 10 charge when you sell.
"Regular savings schemes can also be a more sensible way of buying investment trusts than simply handing over a lump sum," says Brian Dennehy, a Chislehurst- based independent financial adviser.
"This is because of a process called pound cost averaging. This basically means that if you buy shares in an investment trust over a period of time, you'll reduce the risk of buying at the top."
With pound cost averaging, you buy shares at regular intervals, paying various prices. Over the years you consequently end up paying an average price.
"This is particularly relevant now as many people are worried about where stock markets are heading. But if you take a long-term view the ideal way to invest is on a monthly basis so you can be sure to iron out the ups and downs," says Mr Dennehy.
To put it another way, putting regular amounts into an investment trust will benefit from a smoothing effect. Essentially this means that even if the shares fall in price, the investor will benefit as the monthly payment will buy more shares.
Pound cost averaging is particularly good in a time of falling markets for the long-term investor.
You buy shares at a lower price and they will be worth far more when the market eventually rises.
Investment trusts are also eligible for inclusion in a personal equity plan (PEP) and many PEP managers operate similar monthly savings schemes. You can invest up to pounds 6,000 each year in investment trusts which have at least 50 per cent of their assets in the UK or the European Union.
For trusts that do not meet this criteria, the limit is pounds 1,500 per annum.
The advantage of investing through PEPs is that all dividends and gains are free of income tax and capital gains tax. The drawback is that there may be further charges imposed by the PEP managers.
If you decide to buy shares in any investment trusts directly through a stockbroker, you needn't use one of the dusty, grey-suited type of bowler- hatted broker. These days there are a number of quite cheap telephone and postal dealing services available.
Shopping around, you will find that some of these execution-only brokers will allow you to trade from as little as pounds 10 per deal. However, none of these brokers will give you any advice. They will simply act upon your instructions.
Peter Forster, a director of Share Centre, says that because his company is execution only, it can respond very quickly when a customer wants to buy or sell. "In times of rapidly moving share prices and concerns about the markets where those funds are invested, you can sell out of your investment trust just by making a phone call," he points out.
"It's a speedy, flexible response to market conditions, and the fact that you can build a portfolio of as many investment trust companies as you wish, that makes telephone dealing so attractive."
Banks and building societies have got in on the act and offer execution- only share trading with fairly low charges.
However, if you want a more traditional share buying service with the expert advice of an experienced broker, then you will need to use one of the many private client stockbrokers around the country. Be prepared to pay much more for this service. The same can be true if you decide to use an independent financial adviser's services.
A broker's commission is normally around 2 per cent of the value of your investment, usually with a minimum charge which can be pounds 100 or more.
Fee-based financial advisers will charge anything from pounds 150 to pounds 500, or even more. But if you're buying trusts as part of a wider portfolio it may be worth paying an adviser a fee to give you help across the whole spread of your investments. Always check what a broker's commission will be before buying or selling your investment trusts.
For more information about investment trusts, call the AITC on 0171- 431 5222 and ask for an information pack on regular savings.
Details of the nearest independent financial adviser are available from IFA Promotion on 0117 971 1177.
For a national directory of private client stockbrokers, write to the Association of Private Client Investment Managers and Stockbrokers, 112 Middlesex Street, London El 7HY.Reuse content