Some savers invest via a financial adviser, others go direct to the company. "If you haven't time to write, you can simply call them direct," says Rachel Medill, head of corporate communications at M&G. "Most unit trust companies allow you to invest in some of their unit trusts over the phone. Generally, the charges are no different to what you would pay through a financial adviser."
Some companies - such as M&G, Legal & General, Save & Prosper and Royal SunAlliance - have separate direct telephone services, often open seven days a week until 10pm. You simply call up the service, tell the operator how much you want to invest and in which fund, and give some personal details. If you are buying unit trusts, the transaction will go through there and then and you will be sent a contract note. After checking the details, sign it and send it back with a cheque. If you are investing in a PEP you will be sent a form to complete before the transaction is carried out.
So popular has direct investing become that companies such as Virgin Direct and Direct Line only offer unit trusts and PEPs over the phone, passing on the benefits of lower costs to buyers.
Traditional unit trusts have a 5 per cent initial charge. Of this, 2 per cent covers setting-up costs and 3 per cent is commission. With a PEP, the initial charge is likely to be just the 3 per cent commission. Bristol-based Hargreaves Lansdown is one of a number of investment brokers offering a discount service - but with no advice. Discount brokers share this commission with the client either as a cash rebate or an enhanced investment value.
Discount companies split commission in various ways. The Pep Superstore, for example, gives two-thirds of the commission on unit trusts to the investor.
Once you have chosen a unit trust or PEP company, ring up to see if it offers any special deals. Then contact some of the discount brokers to see if they can better this.
q Discount brokers: PepDirect, 0800 413186; The Pep Superstore, 0171 351 6022; Pep Shop, 0115 982 5105; PEPwise, 0345 573277; Hargreaves Lansdown, 0117 988 9880.