Wealth Check: 'How can I start to save and invest for the future?'

Sanal Menon, a 27-year-old Londoner, is a human- resources assistant at a healthcare organisation. He lives in rented accommodation and earns £16,000 a year.

Sanal typically spends £570 a month, plus loan repayments, and is concerned he isn't saving for the future. His only debt is a £3,000 loan with just six months' of repayments left, and his aim is to increase the £200 left each month and explore investment opportunities with a view to starting a business, while keeping some cash back for emergencies.

We asked three financial advisers for their suggestions: Andrew Swallow, of Swallow Financial Planning, Anna Bowes, of AWD Chase de Vere, and Andrew Merricks of Skerritt Consultants.

Case notes

Sanal Menon, 27, human resources, London

Salary: £16,000 a year.

Monthly income: £1,050 after income tax and National Insurance contributions.

Monthly spending: £570 a month on average, including rent, bills and miscellaneous living expenses.

Property: currently living in rented accommodation.

Pension: none.

Debt: took out personal loan of £3,000 to consolidate credit card debts, with monthly repayments totalling around £300. Six months of repayments remaining.

Savings: Sanal tries to roll over £200 of income each month, held within bank account.

SAVINGS

Sanal must pay off his loan before he can think of increasing his savings and consider investment, say the advisers. Andrew Swallow advises him to pay his loan off more quickly, so that he can start saving as soon as possible. This will free up £300 a month, which could be rechannelled into a cash ISA, a tax-free savings account in which you can save £3,000 a year.

Anna Bowes suggests the Kent Reliance Building Society, as it offers a rate of 5.21 per cent on its easy- access ISA.

She warns Sanal to be careful about savings and investments. If he wants to start a business or buy a house in the near future, he will need access to his cash, so he shouldn't focus on long-term assets such as the stock market.

That said, Sanal also donates to fund-raising organisations for Africa and Asia, and says he wants to contribute to providing for the underprivileged while saving for his retirement and the next generation.

Swallow suggests that he invests in ethical funds, thus killing two birds with one stone. Bowes says that giving money isn't the only way to support charity and suggests that, until Sanal sorts out his finances, he could do voluntary work instead.

PENSION

Sanal must be realistic to avoid disappointment later, the advisers warn.

The first step is to find out whether his employer has a pension scheme he can join. This option should not be lightly dismissed especially if his employer will contribute as well.

Swallow also says that Sanal should check to see if his employer provides income protection, as this would cover him in the event of any long-term illness. Bowes adds that if Sanal makes wise financial decisions now, he should be able to provide himself with a more comfortable future, and if his employer doesn't offer a pension scheme he should look into taking out a personal pension.

He is a basic-rate taxpayer so if he invests £20 a month in a pension he would receive 22 per cent tax relief - an extra £5.64. Bowes suggests Legal & General and Standard Life as decent providers of low-cost stakeholder pensions.

However, Merricks feels that a stocks-and-shares ISA might be preferable to a pension. Sanal could make a lump-sum contribution to a pension later to gain tax relief. And ISAs are tax-free when investors take money out, unlike pensions.

INVESTMENT

When Sanal can afford it, he should look at medium- to long-term investments. Bowes suggests he does this via unit trusts or Oeics, and starts by investing into core funds such as Cazenove's UK Growth & Income or Perpetual's Income Fund. Even so, it will take some time to build a healthy portfolio of investments.

For a free financial check-up, write to Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk

News
Pro-Russia rebels guard a train containing the bodies of victims of the Malaysia Airlines flight MH 17 crash in Torez, Ukraine
i100
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
PROMOTED VIDEO
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
News
people
News
The Commonwealth flag flies outside Westminster Abbey in central London
news
Arts and Entertainment
Struggling actors who scrape a living working in repertory theatres should get paid a 'living wage', Sir Ian McKellen has claimed
theatre
News
Skye McCole Bartusiak's mother said she didn't use drink or drugs
peopleActress was known for role in Mel Gibson film The Patriot
Arts and Entertainment
tvWebsite will allow you to watch all 522 shows on-demand
Arts and Entertainment
filmThe Rock to play DC character in superhero film
News
i100
Arts and Entertainment
Damon Albarn is starting work on a new West End musical
artsStar's 'leftfield experimental opera' is turning mainstream
Life and Style
Paul and his father
artsPaul Carter wants to play his own father in the film of his memoirs
Sport
Ben Stokes trudges off after his latest batting failure for England as Ishant Sharma celebrates one of his seven wickets
cricket
Arts and Entertainment
Members of the public are invited to submit their 'sexcapades' to Russell T Davies' new series Tofu
tv
News
Sky's Colin Brazier rummages through an MH17 victim's belongings live on air
i100
Arts and Entertainment
Keira Knightley and Benedict Cumberbatch star in the Alan Turing biopic The Imitation Game
arts + ents'The Imitation Game' stars Benedict Cumberbatch and Keira Knightley
Finacial products from our partners
Property search
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

    Training Programme Manager (Learning and Development)-London

    £28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

    Training/Learning and Development Coordinator -London

    £28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

    Business Anaylst

    £60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

    Project Manager - ETRM/CTRM

    £70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...

    Day In a Page

    Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

    The 'scroungers’ fight back

    The welfare claimants battling to alter stereotypes
    Amazing video shows Nasa 'flame extinguishment experiment' in action

    Fireballs in space

    Amazing video shows Nasa's 'flame extinguishment experiment' in action
    A Bible for billionaires

    A Bible for billionaires

    Find out why America's richest men are reading John Brookes
    Paranoid parenting is on the rise - and our children are suffering because of it

    Paranoid parenting is on the rise

    And our children are suffering because of it
    For sale: Island where the Magna Carta was sealed

    Magna Carta Island goes on sale

    Yours for a cool £4m
    Phone hacking scandal special report: The slide into crime at the 'News of the World'

    The hacker's tale: the slide into crime at the 'News of the World'

    Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
    We flinch, but there are degrees of paedophilia

    We flinch, but there are degrees of paedophilia

    Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
    The truth about conspiracy theories is that some require considering

    The truth about conspiracy theories is that some require considering

    For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
    Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

    Meet the people who play with Lego for a living

    They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
    The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

    20 best days out for the summer holidays

    From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
    Open-air theatres: If all the world is a stage, then everyone gets in on the act

    All the wood’s a stage

    Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
    Rand Paul is a Republican with an eye on the world

    Rupert Cornwell: A Republican with an eye on the world

    Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
    Self-preservation society: Pickles are moving from the side of your plate to become the star dish

    Self-preservation society

    Pickles are moving from the side of your plate to become the star dish
    Generation gap opens a career sinkhole

    Britons live ever longer, but still society persists in glorifying youth

    We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor