Making plans for growth
Saturday 14 August 1999
Graham Newsome. Age: 42. Occupation: Architect
Graham Newsome. Age: 42. Occupation: Architect
Graham Newsome set up his own architectural/ design company two years ago, and its success has led to an increase in income andthe need for him to reconsider his circumstances.
He and his wife have a house valued at approximately £180,000 on which there is a pension-linked mortgage of £106,000. Mr Newsome has been funding his pension since 1985 but the fund is only worth around £ 20,000 to date. The recentmaturity of a property investment has given him £30,000 to invest and he has a further £15,000 in a director's account.Aside from this, the only other monies he has invested are in a Tessa account.
Mr Newsome's primary objective is to expand his business and because of this he needs to retain as much flexibility within hisinvestment planning strategy as is possible. He has also expressed concern over the size of his mortgage and his pension fund.
The adviser: Tim Cockerill, managing director at Whitechurch Securities, independent financial advisers in Bristol (0117 9442266)
The advice: Mr Newsome's main dilemma is whether to keep the £45,000 he currently has as cash or to make a longer-termcommitment and invest some of it. Given that he wishes to expand his business over the next five years and part of this plan would beto move house/business premises, then there is great sense in simply maintaining the £45,000 as cash. The rates of return onbuilding society accounts aren't fantastic, but the flexibility this gives means that he can use that money when he needs it.
If Mr Newsome were to look at stockmarket-based investments then he will need to take at least a five-year view. He therefore needsto decide how much of the £45,000 is going to be used over the coming years for the business/house move. If he feels therewould then be a spare £5,000-£10,000 this might be used. In this case I would suggest that he considers an ISA(Individual Savings Account) because of its tax-free status. Mr Newsome has expressed an interest in higher-risk type investments. Ifeel that the Fidelity ISA would be suitable and through this he could select its South East Asia, UK Special Situations and AmericanSpecial Situations funds to build up a more aggressive portfolio.
He shouldn't pay back part of the mortgage because that would mean spending capital which couldn't then be used to build thebusiness. What he may wish to consider is a flexible mortgage. This would mean that the available cash could be put into a "mortgageaccount", reducing the outstanding mortgage by that sum. However, the actual mortgage is maintained at £106,000 and themoney is still available if Mr Newsome decides to use it for business expansion.
The benefit is that the interest charged on the outstanding loan is reduced. It would rise if he took the money out to buy a property, butit is a means by which the mortgage could be reduced and flexibility retained.
Mr Newsome has a personal pension into which he makes a regular contribution and lump-sum payments as and when the monies areavailable. This obviously gives him the flexibility that he wishes. As he becomes a higher-rate taxpayer, the tax advantage of thepension contributions gets greater and therefore becomes a more efficient investment. For the present, I would leave the pension as itis and concentrate on the business.
As the business expands, Mr Newsome will have more money to invest and he could look at regular savings plans or accumulatecapital and then make lump-sum purchases. The key to building a portfolio in this manner is to ensure that it remains structured. Forexample, the first £1,000 is used to buy into the Henderson Technology investment trust. With the next £1,000 he couldpurchase Martin Currie Japan unit trust, and so on.
If, in due course, Mr Newsome really wanted to "spice up" his portfolio, then he could consider capital shares, which are "geared"investments that exaggerate movements on the market in both an upward and downward direction. Consequently they have enormouspotential to do very well; they do not provide an income and, because of their risk, are not suitable for everyone, but they areparticularly attractive investments.
One particular favourite is Jupiter Split which is available via a savings plan and lump-sum investment and whose performance hasbeen quite impressive this year, rising 17 per cent, whereas the FTSE100 index has returned 3.7 per cent. These are not for thefaint-hearted, but may suit Mr Newsome quite nicely in due course.
In summary, I would suggest that Mr Newsome considers the business expansion plans carefully and tries to ascertain how muchmoney is going to be required. Then look at holding that money in a flexible mortgage account. Scottish Widows offers an idealflexible mortgage.
- 1 As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
- 2 The ten most unequal developed countries in the world
- 3 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 4 New Zealand 'the best country to work as a prostitute', says sex worker advocacy group
- 5 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
The day that Britain resigned as a global power
Labour leadership: Battle lines are drawn as members battle over party's ideology at first hustings of the contest
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof