I find myself in a rather unusual situation, having gone back to study full-time at university at the age of 47.
Q. I find myself in a rather unusual situation, having gone back to study full-time at university at the age of 47. As I have lived abroad for the past three years, I don't qualify for a student loan, so I am funding myself. In June I will be receiving £30,000 from a maturing life insurance policy and would like to arrange to have some money instantly available. However, I want to keep a certain amount earning as much interest as possible.
I estimate that I will need about £10,000 a year for accommodation, fees and expenses. What do you suggest I do?
JM, by email
A. As the £30,000 is funding your university costs, your investments should be risk-free. This being the case, you should put the money into a deposit account while aiming to earn as much interest as possible.
To fund your immediate costs, place some money on instant access. You are only estimating your first-year costs, so make sure you have a little extra in case you have underestimated.
If you have access to the internet, I would suggest putting £9,000 into the Egg Internet Savings Account, which is currently paying a variable rate of 5 per cent per annum gross, including a 0.5 per cent bonus for the first six months. Put a further £3,000 into the Northern Rock mini cash ISA, which is paying 4.8 per cent per annum and requires 30 days' notice. If you do not have internet access, the Chelsea Building Society is offering an instant access rate of 4 per cent.
Having accounted for year one, you need to ensure adequate funding for years two and three. It would appear that you are a non-taxpayer, in which case you should keep to building society accounts and mini cash ISAs, which pay interest gross. However, if you do pay income tax, you should consider guaranteed income bonds.
In this case, I would suggest putting £7,000 into the Scarborough Building Society Fixed Rate Bond, which pays 5.1 per cent gross over one year. At the end of the year the proceeds should be put in an instant access account, with £3,000 going into a mini cash ISA to help fund year two.
The remaining £5,000 could be put into the Abbey National Choices Bond, which offers a return of 5.05 per cent over two years. At the end of that period, move the proceeds into an instant access account, putting £3,000 into a mini cash ISA to fund year three.
Q. Could you please give me a contact for the Pinnacle bond discussed in the Ask Sindie column on 19 May.
BC, by email
A. The bond is available from Pinnacle Insurance, Pinnacle House, A1 Barnet Way, Borehamwood, Herts WD6 2XX (020 8207 9000 or firstname.lastname@example.org).
Sindie was assisted by Patrick Connolly, associate director at independent financial adviser Chartwell Investment Management. Contact: 01225 446556.
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