Money: Invest in the best

Shop around for financial services and save thousands. Rachel Fixsen reports in the last of a series on making the most of your money

DECIDING TO take out a pension plan or investment is only the start. There are thousands of financial products on the market and choosing which one to buy can be confusing. Some people close their eyes and pick one at random, but researching your options is important.

Failing to shop around can cost you dear. When taking out a mortgage people do tend to compare deals offered by different institutions, but many take the first investment, life insurance or pension they come across, according to research by the Consumers' Association (CA).

Mick McAteer, senior researcher at the CA, says: "Most people don't shop around because they consider financial services companies to be necessary evils - they think they'll get just as bad a deal somewhere else."

But in research conducted last year, the CA compared two sets of customers. The first simply bought financial services from High Street providers without comparing, while the second shopped around.

The study found that, in most cases, a family buying a basket of products such as a mortgage, Tessa, personal pension and life assurance would have been pounds 5,000 better off after five years if they had shopped around for better deals.

Research is particularly importantwhen buyinglife assurance. You can easily end up tying yourself in for 25 years, with heavy penalties if you withdraw early.

The difference between a good value product and a poor value one can be huge, especially with a long-term investment. For instance, the charges levied by personal pension plan providers vary so much that if you choose an expensive one, you could end up with 20 per cent less money in retirement.

Where do you start? Specialist publications and personal finance pages in the weekend newspapers are a good place to arm yourself with basic knowledge about the market. The Independent and the Independent on Sundayhave money pages containing advice and recommendations.

MoneyFacts is a monthly publication which has a wealth of information on savings, bank accounts and credit cards. Life & Pensions MoneyFacts, its sister publication, contains performance data and product information for a range of investments.

Before putting money away into your faithful old building society account, take a look at the rate of interest it pays.

You may be surprised at the vast difference between this and the interest offered by a newer account being actively marketed by another institution.

For instance, a Lloyds Bank flexible savings account gives you just 3.4 per cent gross interest a year if you have a balance of pounds 500, while Scottish Widows Bank pays 7 per cent on the same balance with its instant access telephone and postal access account.

Judging how good returns are likely to be from a more complex investment such as a unit trust is more difficult. The small print in investment advertisements constantly reminds us that past performance is no guarantee of future returns. But performance tables are, nevertheless, a good place to start.

Janice Thomson, of independent financial advisers Chelsea Financial Services, says: "It's really all you've got to go by. They're no guarantee, but one would assume that something that has good past performance has a better chance."

With stock market investments, look at performance over the past five and ten-year periods, as equities investments are unsuitable for shorter lengths of time. Check fees and charges levied by the provider, as these can eat into the returns.

Using an independent financial adviser (IFA) is a good idea if you have an important investment decision to make, for instance taking out a pension. IFAs have the resources and expertise to know what is available - and you might be able to sue them if they make a bad choice.

They are legally required to recommend the most suitable product for you.

The best way to find a reputable adviser is by recommendation from a friend. If that isn't an option for you, the phone services listed below will help you track one down.

The best advice is given by financial advisers who work on a fee basis rather than taking commission out of the product they sell you, according to CA research. But many people balk at the idea of paying fees to an IFA, and commission taken out of the product they buy seems less painful.

When buying through an IFA who takes commission, don't be afraid to negotiate, says Janice Thomson. She says: "If it's a product that is not all that complicated, ask whether there is any room for manoeuvre on it."

Whatever financial product you buy, it is important to keep it under review. Your circumstances may change and a safer investment may be more suitable or a new product might come onto the market which gives a better return.

Useful Numbers

MoneyFacts: 01603 476747. Chelsea Financial Services: 0171 351 6022.

Independent Financial Advisers Promotion on 0117 971 1177 will give you addresses of three IFAs in your area.

Money Management magazine has a list of fee-based advisers. Call 0117 976 9444 for a list of the six nearest to you.

The Solicitors for Independent Financial Advice has a helpline; call 01372 721172.

Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film Ridley Scott reveals truth behind casting decisions of Exodus
Arts and Entertainment
An unseen image of Kurt Cobain at home featured in the film 'Kurt Cobain: Montage of Heck'
filmThe singers widow and former bandmates have approved project
Arts and Entertainment
Jake Quickenden and Edwina Currie are joining the I'm A Celebrity...Get Me Out Of Here! camp
tv
Arts and Entertainment
George Mpanga has been shortlisted for the Critics’ Choice prize
music
Arts and Entertainment
Roisin, James and Sanjay in the boardroom
tvReview: This week's failing project manager had to go
PROMOTED VIDEO
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
A comedy show alumni who has gone on to be a big star, Jon Stewart
tvRival television sketch shows vie for influential alumni
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Arts and Entertainment
Image has been released by the BBC
tv
Arts and Entertainment
Will there ever be a Friends reunion?
TV
News
Harry Hill plays the Professor in the show and hopes it will help boost interest in science among young people
arts + ents
Arts and Entertainment
A Van Gogh sold at Sotheby’s earlier this month
art
Arts and Entertainment

MusicThe band accidentally called Londoners the C-word

Arts and Entertainment
It would 'mean a great deal' to Angelina Jolie if she won the best director Oscar for Unbroken

Film 'I've never been comfortable on-screen', she says

Arts and Entertainment
Winnie the Pooh has been branded 'inappropriate' in Poland
books
Arts and Entertainment
Lee Evans is quitting comedy to spend more time with his wife and daughter

comedy
Arts and Entertainment
American singer, acclaimed actor of stage and screen, political activist and civil rights campaigner Paul Robeson (1898 - 1976), rehearses in relaxed mood at the piano.
filmSinger, actor, activist, athlete: Paul Robeson was a cultural giant. But prejudice and intolerance drove him to a miserable death. Now his story is to be told in film...
Arts and Entertainment
Taylor Swift is dominating album and singles charts worldwide

music
Arts and Entertainment
Kieron Richardson plays gay character Ste Hay in Channel 4 soap Hollyoaks

tv
Arts and Entertainment
Midge Ure and Sir Bob Geldof outside the Notting Hill recording studios for Band Aid 30

music
Arts and Entertainment
Look out: Broad shoulders take Idris Elba’s DCI John Luther a long way
tvIdris Elba will appear in two special episodes for the BBC next year
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

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

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
    Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

    Sol Campbell cries foul at Labour's mansion tax

    The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
    Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

    Sarkozy returns

    The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
    Is the criticism of Ed Miliband a coded form of anti-Semitism?

    Is the criticism of Miliband anti-Semitic?

    Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
    Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

    Ouija boards are the must-have festive gift

    Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
    There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

    In pictures: There's a Good Girl exhibition

    The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
    UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

    UK firm Biscuiteers is giving cookies a makeover

    It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
    Can SkySaga capture the Minecraft magic?

    Can SkySaga capture the Minecraft magic?

    It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
    The King's School is way ahead of the pack when it comes to using the latest classroom technology

    Staying connected: The King's School

    The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
    Christmas 2014: 23 best women's perfumes

    Festively fragrant: the best women's perfumes

    Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
    Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

    Arsenal vs Borussia Dortmund

    The Ox celebrates century with trademark display of speed and intuition
    Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

    When two worlds collide

    Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
    Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

    Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

    Our partner charities help veterans on the brink – and get them back on their feet
    Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

    Putin’s far-right ambition

    Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
    Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

    Escape to Moominland

    What was the inspiration for Finland's most famous family?