Betty, a widow, lives in Essex and receives an income of just over pounds 10,000 from her teacher's pension and basic state pension. She has investments totalling more than pounds 60,000, spread between bank and building society accounts, premium bonds, PEPs, capital investment bonds, and shares. This amount includes pounds 6,000 recently inherited from her sister's estate.

Her main reason for seeking advice is over how to use this inheritance to provide her granddaughters with small allowances (about pounds 25 per month) to help them out while at university. Her first granddaughter starts her course this year, with the second starting in 2001.

At the moment she doesn't need any income from her investments as she manages to live fairly comfortably on her pensions. However, she accepts that this may not be the case in the future, therefore doesn't want to give away any capital.

Betty considers her attitude to risk as medium and believes that you have to take a bit of a gamble in order to get a reasonable return.

The adviser: Donna Bradshaw, of independent financial and tax advisers Fiona Price & Partners, 33 Great Queen Street, London, WC2B 5AA (0171 4300366) website:

The advice: The objective is to restructure Betty's investments to allow for capital growth while allowing for future income needs to be satisfied.

As always, I start with her bank accounts. She is happy with her cheque account but I needed to review the best place for her savings. Betty has over pounds 20,000 sitting on deposit, far more that is necessary considering her attitude to risk and her need for emergency funds.

After checking the rates she is receiving from each provider and comparing them with the best rates currently available I would advise her to keep the Nationwide Flexi account for day-to-day spending. The Halifax save- as-you-earn account should also be left where it is.

The majority of the money held on deposit is split between a Nationwide investment account (pounds 8,300) and Bradford & Bingley 60 day plus account (pounds 11,000). These pay 5 per cent and 4 per cent gross respectively. Due to the potential windfall payment from the Bradford & Bingley, it might be advisable to keep her emergency cash reserve with them - despite the lower interest rate.

But Betty should bear in mind that as the Bradford & Bingley account is a notice account, she will not be able to move money to and from it to her cheque account as easily as she can with the Nationwide. I would maintain at least pounds 8,300 but be aware that reducing the level of investment may reduce the windfall entitlement.

Betty also holds pounds 2,000 of Premium Bonds. Clearly The more Premium Bonds she holds, the more likely Betty is to win, but there is no magic amount that guarantees a win. I would therefore reduce the holding to pounds 500 which will allow her to have a bit of fun without tying up too much money where she may get little or no return.

With the remaining pounds 13,000, I would put pounds 7,000 into a high yielding ISA and the remainder in a unit trust from the Equity Income sector. This would allow Betty's to meet her main objective, which is to provide her grandchildren with a small income whilst at university.

For the ISA, she should look at CGU Monthly Income Plus. The income from the fund is higher than that available from deposit accounts, shielded from tax, and more than enough to cover the pounds 25 per month needed for grand- daughter number one. In addition there is the potential for capital growth. The additional income needed in two years can be taken from the unit trust, in the meantime it can be reinvested it.

As for Betty's other investments, I would advise her to leave them where they are. Her PEPs are with Jupiter and Perpetual, both companies with good track records and sound management. Part of her Perpetual PEP is held in the Far East fund. This is considered a high risk investment. However, as the proportion held is not so large as to adversely affect the overall balance, it can also be left as is.

Finally, in future I would advise Betty to move the maximum pounds 1,000 each year from her building society account to a Mini cash ISA. The rates offered in the ISA are more attractive than conventional accounts and are tax free. I would start this from 6 April 2000. In addition, she should convert up to pounds 3,000 of the unit trust to a Mini equity ISA at the start of the next tax year. Then repeat until all the unit trust is in ISAs.