Personal Finance: Financial Makeover: Family home is a nest-egg for retirement

NAME: JIM AND EILEEN MACLEOD

AGE: 45 AND 46

OCCUPATION: SALES DIRECTOR AND CARER WITH THE DEAF BLIND ASSOCIATION

Jim and Eileen will celebrate their 25th wedding anniversary next year with their four children, Dominic, Shona, Vincent and Alexandra. Jim is a director of his company and can buy into the business. They have a repayment mortgage on their house and they see the property as a long-term investment.

When it comes to risk, Jim says: "I was taught to be cautious." He is very cautious. Consequently they have only a few investments exposing them to the stock market. Jim has a small self-administered pension scheme which he holds as cash, and Eileen has no pension. They have surplus income they want to invest monthly and will take more risk with this investment.

Jim and Eileen are looking for a long-term strategy to see them through to retirement and ensure their children can go on to higher education.

The adviser: Tim Cockerill is managing director of White-church Securities Limited, an independent financial adviser in Bristol. Call 0117 944 2266.

The advice: A long-term strategy would tie in their existing investment, their property, Mr Macleod's pension scheme and the children's education. A "float" of ready cash in a building society to meet unforeseen expense is essential, perhaps pounds 5,000 to pounds 10,000. Both have TESSAs taken out last tax year and they can build these to the full pounds 9,000 if they have sufficient cash.

Their house is large enough to cope with a family of six, but in 10 years all the children are likely to have left. Dominic, the youngest, would be 19 and probably at university. That is the time the Macleods will consider moving to a smaller property, releasing equity from the family home.

Predicting the long-term value of property is difficult, but sale should release enough for a good retirement portfolio. They have a repayment mortgage, because endowment value at maturity is uncertain.

They have two MultiPEPs with Skandia, a type with slightly higher charges which allows investors to select from a broad range of funds. If they wish to switch between Fidelity and Perpetual they simply instruct Skandia. This means they do not face the hassle of transferring PEP plan manager.

They also have two single-company PEPs, which are high-risk. The Macleods are relying on one company, rather than a whole spread, as through a unit trust.

If the share price drops so will the the PEP value. Even companies which once seemed rock-solid, say, M&S, can come unstuck.

Mr Macleod, as a director of his printing company, intends to buy into the business. Hopefully, they will do well and his growing shareholding will produce a growing dividend. His pension fund is a small self- administered scheme (SSAS).

He is holding cash, and he should consider buying a property. This will generate a probable income of 9 to 10 per cent on a commercial property. An ideal one would be high street premises leased for 10 years to a well-known retailer.

Mrs Macleod may consider contributing to a stakeholder pension; her earnings dictate how much can be invested or where it comes from.

These are the longer-term issues. The Macleods' most pressing short- term requirement is to invest pounds 150 a month. They are prepared to take more risk with this so two unit trust savings schemes should be used, giving a greater spread of investments which diversifies their risk.

The schemes should be made through individual savings accounts (ISAs) because capital gain will be tax-free and tax on income received can be reclaimed.

The recommended two are Templeton Global Growth, which takes a long- term conservative investment stance and Britannia Special Opportunities which is well diversified, but more aggressive.

The Macleods hope to pay for further education for their children through earnings, although the regular unit trust savings schemes could be cashed in, and they could use the money they have accumulated in their PEPs, starting with the single-company ones.

In time, Mr Macleod's shareholding in his company may be sold to an outside investor, and his pension fund can be used to buy a property which is a holding he will not have to worry about for 15 years or so.

And their own property will raise capital for them in 10 to 15 years, after the children have left.

If you would like a free copy of `The Independent's' guide to `High Risk High Reward Investments', sponsored by Whitechurch Securities Ltd, call freephone 0800 374413. If you would like to appear in the Financial Makeover write to Tim Cockerill c/o `Financial Makeover', The Independent, One Canada Square, Canary Wharf, London, E14 5DL. You must be prepared for your name and picture to be used in the article.

Life and Style
love + sex A new study has revealed the average size - but does that leave men outside the 'normal' range being thought of as 'abnormal'?
Arts and Entertainment
TV
Voices
The Palace of Westminster is falling down, according to John Bercow
voices..says Matthew Norman
Sport
Steve Bruce and Gus Poyet clash
football
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
News
Graham Norton said Irish broadcaster RTE’s decision to settle was ‘moronic’
TV
Arts and Entertainment
Jake and Dinos Chapman were motivated by revenge to make 'Bring me the Head of Franco Toselli! '
arts + ents Shapero Modern Gallery to show explicit Chapman Brothers film
Arts and Entertainment
Kurt Cobain performing for 'MTV Unplugged' in New York, shortly before his death
music Brett Morgen's 'Cobain: Montage of Heck' debunks many of the myths
Life and Style
life
Sport
Brendan Rodgers
football The Liverpool manager will be the first option after Pep Guardiola
News
Amazon misled consumers about subscription fees, the ASA has ruled
news
Arts and Entertainment
Myanna Buring, Julian Rhind-Tutt and Russell Tovey in 'Banished'
TV Jimmy McGovern tackles 18th-century crime and punishment
Arts and Entertainment
Paul Whitehouse as Herbert
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs General

    Recruitment Genius: Lettings and Sales Negotiator - OTE £46,000

    £16000 - £46000 per annum: Recruitment Genius: This is an opportunity to join ...

    Recruitment Genius: Home Care Worker - Reading and Surrounding Areas

    £9 - £13 per hour: Recruitment Genius: This is a great opportunity to join a s...

    Recruitment Genius: Key Sales Account Manager - OTE £35,000

    £25000 - £35000 per annum: Recruitment Genius: Have you got a proven track rec...

    Recruitment Genius: Sales Executive - OTE £40,000

    £15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

    Day In a Page

    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot
    Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

    Poldark star Heida Reed

    'I don't think a single bodice gets ripped'
    The difference between America and Israel? There isn’t one

    The difference between America and Israel? There isn’t one

    Netanyahu knows he can get away with anything in America, says Robert Fisk
    Families clubbing together to build their own affordable accommodation

    Do It Yourself approach to securing a new house

    Community land trusts marking a new trend for taking the initiative away from developers
    Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

    David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

    The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
    With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

    Money, corruption and drugs

    The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
    America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

    150 years after it was outlawed...

    ... America's first slavery museum is established in Louisiana
    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
    Tony Oursler on exploring our uneasy relationship with technology with his new show

    You won't believe your eyes

    Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
    Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

    Moores must go. He should never have been brought back to fail again

    The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn