Wealth Check: Cash overboard. 'How can I get saving?'

Each week we give 'Independent on Sunday' readers a financial makeover


The problem

The problem

Most of Shelley Jory's spare cash is scattered on the waters. A successful businesswoman, she is also one of Britain's foremost female powerboat racers and a record-holder who came third in the Honda Championships earlier this year.

Although she devotes her time and money to this exhilarating pursuit, she has kept herself debt free. But she worries her finances are not in as good working order as her boats.

Her only "rainy day" funds are £1,500 in a Halifax instant savers account earning 2.52 per cent. A £5,000 investment put in a Threadneedle equity individual savings account (ISA) four years ago has been "disappointing, to say the least": it is worth no more today than it was then.

Of greater concern still is her mortgage. Her £193,000 loan with Bristol & West on a four-bedroom house is interest-only; she plans to pay off the capital using a chunk of her future pension fund. It's an unusual arrangement, and she is aware that the fund will have to grow considerably for this to happen.

Shelley is midway through the four-year deal, at a pay rate of 6.5 per cent, and while any switch to a rival lender would incur a 5 per cent penalty, she wonders if it would be better to take a financial hit now, since the home/pension plan carries a high element of risk. "With the bridalwear business doing well, I wonder if it's time to switch."

She has paid into a Zurich personal pension for 13 years, making the maximum annual con- tributions allowed by the Inland Revenue. She has £190,000 life cover with Bristol & West and a critical illness protection policy with Zurich that will pay out if she is injured powerboat racing. "I feel I should probably start saving properly," she adds.

Shelley "won't be powerboating for ever" and so will have more disposable income in around five years' time.

Interview by Sam Dunn

The patient

Shelley Jory, 34, from Southampton.

Job: partner in family bridalwear business.

Income: £45,000 to £50,000.

Savings: £1,500 in a bank account.

Investments: £5,000 in an equity ISA.

Goal: to secure her long-term future.

The cure

Remortgaging is probably not the best option at the moment, says Danny Cox of independent financial adviser (IFA) Hargreaves Lansdown.

Shelley needs to put her pension arrangement under the microscope, says Jennifer Storrow at IFA Gee and Co.

Property/pension

Switching to a repayment deal would take the pressure off the pension planning and chip away at the outstanding capital sum. Doing so with her existing provider Bristol & West should not cost more than an administration fee, says Gillian Cardy of IFA Professional Partnerships.

However, depending on the deal Shelley secures, the monthly sums will probably rise to about £1,200 a month, says Mr Cox (she currently pays about £900). "Shelley should grin and bear it for the next two years and then remortgage with an eye on moving to a half-interest, half-repayment deal," he adds.

If she decided to stick with the interest-only arrangement, her pension pot would have to grow to nearly £800,000 to be able to pay off the £193,000 loan on her home in 25 years' time, say Mr Cox and Ms Cardy. This is a huge sum and by no means guaranteed.

Mr Cox also suggests that Shelley check the Zurich pension fund charges to see if they are particularly high compared with those available now in stakeholder or self-invested personal pension (Sipp) plans. If they are, it may be worth moving the money to a rival provider even if she has to pay a transfer fee, as she has 25 years of pension provision in which to make this up.

It might also be worth consulting a specialist pensions IFA to consider a small self-administered scheme (SSAS). As a partner in a family firm, Shelley can use the funds in a SSAS for business investment and as security for commercial loans.

Savings

Shelley should move her cash out of the Halifax to earn more interest, advises Ms Cardy. Accounts offering instant access and better rates include the AA's Telephone Savings (5.36 per cent but including a 0.7 bonus for 12 months) and Yorkshire Building Society's e-Saver online account, paying 5.2 per cent.

For regular saving, Abbey's mini cash ISA at 5.35 per cent is still one of the best around, says Ms Storrow.

Investments

Shelley is not alone in her disappointment at her equity ISA's performance. Many who bought into these funds at that time piled in at the top of the market, only to lose money as stock indices fell.

However, Ms Cardy says: "She needs to keep her money invested and keep on investing even when markets are down, because if and when they turn, she will benefit from the rises."

Alternatively, Ms Storrow suggests Shelley re-register the Threadneedle ISA with an online fund supermarket, to spread her money across a number of different funds.

If you would like a financial makeover, write to Sam Dunn at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS, or email s.dunn@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
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

    SThree: Graduate Recruitment Resourcer

    £20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Business Analyst - Financial Services - City, London

    £50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

    SThree: Trainee Recruitment Consultant

    £18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

    Day In a Page

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence