Wealth Check: 'How can we tidy up our finances for the future?'

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With a baby due in weeks, the Sadlers feel that they need a complete financial review, but the couple admit that they don't know where to start. Will Sadler works as a chartered surveyor in the North-west. His wife, Annwen, is a doctor who is training to be a GP but she is currently on maternity leave.

With a baby due in weeks, the Sadlers feel that they need a complete financial review, but the couple admit that they don't know where to start. Will Sadler works as a chartered surveyor in the North-west. His wife, Annwen, is a doctor who is training to be a GP but she is currently on maternity leave.

They hope to move to a larger house in about six months' time, so their finances need to support this. But they also have some small investments in telecoms and technology, which they wonder whether they should review. Given the performance of their tech Isa, they are only prepared to take a small amount of risk, but they do want their cash savings to work harder.

We put their case to Justin Modray at Best-Invest, Anna Bowes at Chase de Vere and Anna Sofat at Destini Fiona Price.

WILL SADLER, 30, & ANNWEN SADLER, 29

Salary: £70,000 jointly.

Debt: Car hire purchase £170 for another two and a half years (£3,000 to buy it). Will £500 for student loan and Annwen £3,000.

Property: Two-bed terrace; mortgage of £86,000 on Nationwide variable rate.

Savings: Cahoot £10,100. Lloyds TSB £15k. Natwest current account £7,700.

Investments: New Star technology fund £457.03 and shares in other firms.

Pension: Annwen, NHS scheme. Will, Scottish Mutual at £195 per month.

SAVINGS AND DEBT

The Sadlers want to make their cash savings work harder, but still have the money to hand for their planned move.

Mr Modray says that the couple could move some of their savings into cash Isas to maximise the interest they earn. Using up this and next year's tax allowances, they could shelter as much as £12,000 from tax this way. Abbey offers a market-leading interest rate of 5.35 per cent.

But Mr Sadler's NatWest current account pays just 0.1 per cent interest. Mrs Sadler's Lloyds TSB and the couple's Cahoot account pay significantly more but, says Ms Bowes, still less than they could earn by moving much of the money to a savings account. Alliance & Leicester pays 5.35 per cent gross for its online account.

Ms Sofat says that although the Sadlers have few debts, they should pay off the car loan, if they can using some of their cash. However, hire purchase agreements often have early-repayment penalties, so they should check this first.

MORTGAGE & PROPERTY

If the Sadlers remortgaged now, any short-term savings on the interest rate could be swallowed up by valuation and legal fees when they come to move in a few months' time. Ms Sofat and Mr Modray both suggest that the Sadlers look at an offset mortgage. They have healthy levels of savings. An offset mortgage earns the equivalent of the mortgage rate on any savings, and this is tax-free.

Ms Bowes points out that although the Sadlers are paying the standard variable rate, Nationwide's is one of the most competitive. The panel feel there is no real hurry for the couple to change lenders, given that they plan to move soon.

PENSIONS

Mrs Sadler benefits from membership of the NHS pension scheme. But she is training to be a GP, and Ms Sofat points out that her pension will be based on lifetime earnings, somewhat less generous than the final salary scheme offered to hospital doctors. Although she might not be able to do so now, Ms Sadler should look at topping up her pension.

Mr Sadler should check whether his fund allows access to external fund managers. If not, he could move his money to one which does, such as Scottish Widows, says Mr Modray.

INVESTMENT

Ms Bowes says that given the Sadlers' conservative attitude to risk, they should consider selling their shares and the technology fund, and start afresh. Ms Bowes suggests core funds such as Invesco Perpetual Income or Fidelity Wealthbuilder.

Ms Sofat says that although Mr Sadler was burnt by the technology crash, this is no reason for the couple to be overly cautious. Technology funds are inherently risky, but there are plenty of other low- and medium-risk funds available.

She suggests that the couple swap their individual shares for broad-based unit trusts, through a stocks and shares Isa.

Mr Modray says that Mr Sadler's New Star technology fund has fallen dramatically since the peaks of 2000.

He could consider moving to a more highly rated technology fund such as SG Technology, or switch to an aggressive fund with a wider remit such as New Star Select Opportunities.

PROTECTION

Ms Sofat says that protection is the biggest gap. With a baby on the way, the couple should look at income replacement or critical illness cover, and at the very least, take out life assurance.

Advisers' views are given for guidance only.

* If you would like a free financial check-up, which will appear in the Wealth Check column, write to The Independent, 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk.

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