Options: Make the most of a spare pounds 250: An investment mix is preferable to putting all your eggs in one basket

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The Independent Online
I am in my 30s and usually have pounds 250 left each month. I have a pension. I will not need my money for quite a few years.

With pounds 250 you can make more than one choice - almost all monthly savings schemes will take pounds 50.

You could set up a standing order to sweep some into a building society account and use this for emergencies or to repay some of your mortgage.

There is no point handing it over month by month as most lenders will only credit lump sums to your mortgage account once a year. So make sure you don't give them an interest-free loan.

Are you sure your pension will be enough to keep you in style? Perhaps pounds 50 could go into a top-up pension called an AVC (additional voluntary contribution).

This can either be through your own employer's scheme, or you can go to an insurer and set up your own portable AVC. Remember though, that ploughing money into a pension means you will not be able to get your hands on it until you retire.

If you do not fancy taking chances with your money, one tax-free option is a building society Tessa account. A five-year scheme pays up to 7 per cent interest or more.

Should you need the money, you can always get it quickly, although you will lose the tax-free element.

Another safe - and tax-free - way of stashing away cash for a rainy day is the Government-sponsored Save-As-You-Earn scheme which pays 8.3 per cent on savings of pounds 20 a month. If you save for a further two years, the rate goes up to 8.62 per cent.

Historically, the best investment growth has come from equities, even if they are riskier. Personal equity plans, or PEPs, are the most tax-efficient way of putting money into equities. PEPs allow you to take income from them free of tax. When you sell, any growth in the fund will also be tax-free.

You can invest monthly and are allowed to save up to pounds 6,000 a year in PEPs, plus a further pounds 3,000 in a single company's shares.

If you have a windfall you can add it to that year's PEP allowance. But if you can't afford to pay in the money for a while, you can easily stop.

The choice of where you put your money is almost endless, ranging from solid blue-chip company shares to far riskier investments.

A tax-free friendly society bond has to be kept going for 10 years, but as the maximum you can put in is pounds 18 a month, you should hardly notice.

Whatever you decide, it doesn't usually pay to put all your eggs in one basket. To get the best from your regular savings, think in terms of a mix.

Fact file

Money pounds acts is a monthly guide to current rates offered on savings accounts, current accounts, overdrafts, loans, credit cards, mortgages - including SAYE and Tessas. Annual subscriptions cost pounds 38.50. Single issues can be ordered for pounds 4.24 including p&p. Telephone orders using credit or debit cards 0692 500665, or write to Money pounds acts, Laundry Loke, North Walsham, Norfolk NR28 0BD.

A free information pack on PEPs plus a list of companies that provide them is available from the Association of Unit Trusts hotline on 081-207 1361, open every day from 8am to 11pm.

National Conference of Friendly Societies on 071-606 1881.

AVCs - cheapest through employers' schemes. Advice on free-standing AVCs from independent advisers.

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