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.

PROMOTED VIDEO
Arts and Entertainment
Martin Freeman as Lester Nygaard in the TV adaptation of 'Fargo'

TV
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules

film
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'

film
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>

film
Arts and Entertainment

theatre
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book

books
Arts and Entertainment
Panic! In The Disco's Brendon Urie performs on stage

music
Arts and Entertainment

film
Arts and Entertainment
Keira Knightley and Benedict Cumberbatch star in the Alan Turing biopic The Imitation Game

film
Arts and Entertainment

TV
Arts and Entertainment
Radio 4's Today programme host Evan Davis has been announced as the new face of Newsnight

TV
Arts and Entertainment
Pharrell Williams performing on the Main Stage at the Wireless Festival in Finsbury Park, north London

music
Arts and Entertainment
Carrie Mathison returns to the field in the fourth season of Showtime's Homeland

TV
Arts and Entertainment
Crowds soak up the atmosphere at Latitude Festival

music
Arts and Entertainment
Meyne Wyatt and Caren Pistorus arrive for the AACTA Aawrds in Sydney, Australia

TV
Arts and Entertainment
Rick Astley's original music video for 'Never Gonna Give You Up' has been removed from YouTube

music
Arts and Entertainment
Quentin Blake's 'Artists on the beach'

Artists unveils new exhibition inspired by Hastings beach

art
Arts and Entertainment
MusicFans were left disappointed after technical issues
Arts and Entertainment
'Girl with a Pearl Earring' by Johannes Vermeer, c. 1665
artWhat is it about the period that so enthrals novelists?
Arts and Entertainment
Into the woods: The Merry Wives of Windsor at Petersfield
theatreOpen-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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.

    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform