Regular Savings Plans
Introduction
Whether you are able to invest a significant sum or only a small amount, making regular savings is one of the most effective methods of building a nest egg for the future.
Where you choose to invest your regular savings depends on your timescale and attitude to risk. If time is short or you are not willing to take any risk, a simple easy access savings account is worth considering. You will get your original investment back, plus interest, and you will be able to access your money. This is a simple way of saving regular lump sums, although returns will be limited.
If you hope for higher returns and can afford to tie your money up for at least five years, the stock market offers better growth potential. Regular saving into a unit or investment trust or an open-ended investment company (OEIC), for example, not only avoids the risk of bad timing - putting a lump sum in just before prices fall - but it also removes the stress of trying to second guess stock market movements.
Unit trusts, investment trusts and OEICs are pooled funds which offer relatively cheap and convenient ways for investors to gain exposure to the stock market. They diminish, but cannot eliminate, the risk inherent in bonds and equities by diversification, as your money is spread over dozens of stocks and shares.
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