Family home is a nest-egg for retirement - Spend & Save - Money - The Independent

Family home is a nest-egg for retirement

Financial Makeover


NAME: JIM AND EILEEN MACLEOD

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 £5,000 to £10,000. Both have TESSAs taken out last tax year and they can build these to the full £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 £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.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Finacial products from our partners
Property search
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 Money & Business

    Sales Executive

    £20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

    Payroll & Accounts Assistant

    £20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

    SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

    £280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Senior BA - Insurance **URGENT**

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week