Wealth Check: 'Freedom and security - can I have it all?'

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

The problem

The problem

Sally Cornford is keen on taking a career break and going travelling, but she doesn't want to leave her financial future hanging in the balance.

She also wonders whether she would be better off changing the financial arrangements for her flat. She recently bought a two-bedroom £120,000 home in St Albans via the Homebuy scheme. Her local Stort Valley housing association owns 25 per cent of the property and she is thinking of saving up to buy it out. Sally has a £90,000 three-year fixed-rate deal at 5.14 per cent on the remaining portion with Britannia building society.

"In the long term, I'd like to buy out the housing association and keep the flat as an investment," she says. "However, I don't know how best to save enough to do this."

She has accumulated £1,000 in savings so far, earning 4.5 per cent in an Egg online account. But she owes Egg nearly £4,000 on a personal loan with an annual percentage rate (APR) of 7.9; she repays £126 a month.

Her pension provision is going well. As a civil servant, she is a member of a non-contributory final salary scheme, which means there is no need for her to pay into her retirement fund. The equivalent of about 7 per cent of her annual salary is being paid in. Two years ago her pension projection was £10,194 a year, with a £28,502 lump sum payable upon retirement.

To get the full benefit of such a generous scheme, Sally is also buying "added years" and considering extra investment through additional voluntary contributions (AVCs) with either Scottish Widows, Standard Life or Equitable Life.

She is also keen to start investing in individual savings accounts (ISAs), particularly ethical or "green" funds. However, there is a caveat: "I would want the green investment to be competitive; I wouldn't want to miss out entirely on growth elsewhere in the stock market."

She would also change her Barclays account if a bank with a more ethical approach could be found.

Interview by Sam Dunn

The patient

Sally Cornford, 31, from St Albans. Job: civil servant. Income: £23,000 to £25,000. Savings: £1,000 in an Egg online account. Investments: none. Goal: to protect her financial future and finance a career break.

The cure

Before Sally can start setting money aside, she needs to decide which financial goal to target, because of the differences between saving for the long and the short term, says Anna Bowes of independent financial adviser (IFA) Chase de Vere.

Philippa Gee of IFA Torquil Clark agrees and suggests a financial "detox" that first pays off the loan and then channels her cash into a mini cash ISA.

For an ethical stance, Sally should consider the Isis Stewardship stock market fund, advises Ben Gibbs of IFA Glazers Financial Services.

Ms Gee also recommends that Sally check the Co-operative Bank's ethical policy on its website before switching to its current account.


It makes little sense for Sally's £1,000 Egg savings to be earning just 3.6 per cent after tax, when she is paying 7.9 per cent interest on her £4,000 debt, says Mr Gibbs.

"Unless the penalty for paying off the loan is very high, she is better off using her savings to clear part of it."

Ms Gee estimates that, by drawing up and sticking to a tight budget, Sally could afford to earmark £300 a month for clearing her debt. "I would hope that over a 12-month period, the debt could be wiped out."


Sally needs to decide how quickly she'll want to get her hands on the money she saves once the debt has been cleared; her choice of product will depend on it.

"If she hopes to travel in anything less than five years, she needs to invest as much as she can afford in cash products," says Ms Bowes.

A mini cash ISA such as Abbey's postal account, offering 5.35 per cent interest, will let her savings grow free of tax, she adds. Once her £3,000 annual limit is used up, she should find a higher-paying savings account.

Sally's Egg internet account already pays a decent rate but better deals are out there. Ms Bowes recommends Birmingham Midshires, which pays 5.4 per cent interest (although this includes a 0.45 per cent bonus for 12 months).


If Sally decides that buying the housing association's share of her flat is a priority, she should consider investing money in stocks and shares ISAs.

With an eye on her ethical preference, she could try the Isis Stewardship Growth or Standard Life UK Ethical fund, suggests Ms Gee, or the Artemis Multimanager Ethical fund. "It has higher charges but has exposure to a variety of ethical funds that are constantly reviewed and analysed," she adds.

If Sally puts less than £3,000 into a mini cash ISA, she can invest up to £3,000 in a mini equity ISA in the same tax year. This will enable her to build up a deposit for the long term. But she needs to be realistic about how long it could take to achieve such a sum - perhaps as much as l0 years, Ms Bowes adds.


Since she is single with no dependants, Sally has no need to take out life insurance to pay off her mortgage if she dies before the end of the term, says Mr Gibbs. But as a civil servant, if she was off work due to a long-term illness or disability, she would be entitled to six months' full pay, followed by six months' half pay.


Sally is lucky to benefit from such a final salary pension, and Ms Gee says she has no need to invest in AVCs. But if she insists on going down this route, Ms Bowes suggests choosing either Standard Life or Scottish Widows.

If you would like a financial makeover, write to Melanie Bien at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS, or email m.bien@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

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
    'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

    'Queer saint' who bankrolled artworld giants

    British culture owes a huge debt to Peter Watson, says Michael Prodger
    Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

    Pushkin Prizes brings countries together

    Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
    14 best kids' hoodies

    14 best kids' hoodies

    Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
    Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

    The acceptable face of the Emirates

    Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk