Karen has started a new job, following a period of self-employment since redundancy a few years ago. Her husband, Edmund, is retired on ill health grounds and they are both in receipt of a pension from their previous employers. They jointly own a property, with a very small mortgage and equity of about pounds 250,000, which they rent out. Their own home has no mortgage.

Karen and Edmund have several investments, including a National Savings Investment Account, National Savings Certificates, a plethora of with- profits endowments and some windfall shares.

The couple's priority is to use the pounds 1,000 per month available to them to invest for capital growth and to invest a further pounds 20,000, also for capital growth. Karen's main concern is to be able to afford additional home help should her husband's health deteriorate, and to ensure that she is financially secure should her own health suffer in the future.

The adviser: Martha Catterall is a director at City Independent, independent financial advisers, 35 Paul Street, London EC2 (0171-528 0092)

The advice: First, there is a need for an emergency fund, for use in unforeseen events. I recommend about pounds 6,000 is placed in it and that the pounds 6,000 you have in the National Savings Investment Account, currently paying 4 per cent gross, is moved to Sainsbury's Bank ( paying 5.35 per cent) or Egg (6.0 per cent). Your windfall shares are doing very well and I advise that you simply keep hold of these as "rainy day" money.

You have a number of smallish endowments maturing between 1999 and 2004. The endowment maturing this year is earmarked to pay for a three-year post-graduate doctorate.

As for the others, you must see what both your situation and the products available at the time are. However, there are a number of low- to-medium risk investment vehicles which would be appropriate, including corporate bond funds or tracker funds within an ISA, or even traded endowment policies.

From the pounds 20,000 available, I recommend that you both maximise your ISA allowance of pounds 7,000 each for 1999/2000. Although ISAs are advantageous for higher-rate taxpayers, I feel that it is also appropriate for basic rate taxpayers like your husband to take advantage of tax-free growth. Your fund choice should reflect your attitude to risk, which is fairly cautious: M&G Corporate Bond fund (with income reinvested) or Fidelity's Moneybuilder Growth fund.

However, to create capital over the 10-15 year period you can afford an element of medium risk too: Jupiter's or Invesco's European Growth Fund, or Gartmore's UK Index Fund, are ideal for this. There is no need to rush into ISAs, however, as the market is artificially inflated owing to the "last-minute PEP rush" in my opinion.

Waiting until later in the year and contributing on a monthly basis would be sensible. I would invest the remaining pounds 6,000 into a traded endowment plan, as it fulfils your objectives: a low risk investment you can tailor to your needs (you chose one that matures when you want capital at an appropriate premium level and purchase price). You could also invest your maturing National Savings Certificates into these vehicles, as National Savings per se have failed to maintain their competitiveness.

You are already receiving your main pension, which is indexed each year and has a 50 per cent spouse's benefit built in. However, it is not enough on its own and you are keen to use the next 10 years to build up another pension pot. Your current employer offers a Group Personal Pension Plan after six months of employment and contributes 12 per cent of your basic salary into it.

Contributions into Personal Pension Plans are determined by earnings and age, and once they have put their 12 per cent in you can still pay up to 18 per cent, which is pounds 309.30 net per month. If the full 30 per cent of your salary was paid into a personal pension for the next 10 years, it would create a pension of pounds 10,700 a year, based on present assumptions from Eagle Star. As a higher-rate taxpayer you receive tax relief on your contributions at top rate, which grow in a tax-efficient environment.

All pension plans that need to be "stakeholder friendly" have high early surrender values, so you should check with your employer that this is the case with its Group Personal Pension scheme. However, your earnings are in excess of pounds 18,000 a year, which would, based on current information, indicate that a stakeholder pension would not be appropriate anyway. In addition, you should find out the terms for the Group Personal Pension, as it may be best for you to pay your 18 per cent contribution into it.

Always apply for waiver of premium on a personal pension plan, thus ensuring that if you are unable to work due to illness, the pensions provider will take over your (and your employer's) contributions for you. Complete a BR19 form, available from DSS offices, to find out what State benefits you can expect to receive at State retirement age. I also recommend a critical illness policy, which will pay out tax-free cash on diagnosis of a critical condition.

Of the pounds 1,000 a month available for financial planning purposes, I recommend that pounds 200 is set aside for holidays and general fun, pounds 309.30 for pension planning, pounds 83.59 for pounds 100,000 of critical illness cover with Skandia Life, pounds 300 for investment into low risk unit or investment trusts, earmarked to pay for long-term care, should you need it. This leaves pounds 100 a month to go towards monthly premiums for the traded endowments discussed earlier.

Long-term care is in a state of flux at present and you are too young to be paying insurance premiums for this, though this is advisable once you are 60. You would be better off, at this stage, building up capital.