Wealth Check: 'I need to have instant access to my savings'

Christoph pays £350 a month into an HSBC instant access savings account, but wonders whether his savings of £7,400 could be better invested. As Christoph is employed on a series of fixed-term contracts, he has been reluctant to invest in anything that does not offer instant access to the cash, in case his work dries up.

Christoph is a member of the Universities Superannuation Scheme, the further-education pension plan, and also has life insurance he took out before moving to the UK from Germany worth €200,000.

Ian Smith of Central Financial Planning, Alan Adam of Alan Steel Asset Management, and Patrick Connolly of John Scott & Partners offer a professional opinion on Christoph's circumstances.

Case notes

Christoph Raatz, project worker, 30, north London

Personal: Christoph Raatz is a project worker employed by London University

Income: £27,085 a year

Monthly outgoings: £400 on rent, £120 on bills, £350 paid into savings account and £150 contributed to pension fund. Varying spending on going out and other costs.

Savings: £350 a month into an HSBC Instant Access Savings Account. The money is to be used to fund his wedding and possibly for a deposit on a property

Pension: Christoph is a member of the Universities Superannuation Scheme, paying 6.35 per cent of his salary into the plan. His employer tops this up to 14 per cent

Insurance: Life insurance in Germany worth €200,000, but no other protection policies.

INSURANCE

Ian Smith wonders whether it is sensible to hold life insurance with an overseas company. Chris- toph should check whether this cover is valid now that he is living permanently in the UK. In any case, it may be more practical and cost-effective to take out UK life insurance. A level-term policy providing cover of £200,000 would cost him £19.15 a month from Legal & General, for example. The policy can be set up within a trust to ensure that the funds went to the right beneficiaries and avoided inheritance-tax charges.

Alternatively, from next April, it will be easier to get term assurance within a pension, as the current rules on funding limits are to be reformed. As tax breaks are available on pension-linked insurance, this may be a cheaper option.

Taking out permanent health insurance to ensure that his income is protected is a good idea, adds Alan Adam. To reduce the cost, Christoph could opt for a policy where claims can only be made 12 months after illness begins. But he must find out what his employer offers, especially as he is on a fixed-term contract.

SAVINGS

Patrick Connolly warns that Christoph is doing himself no favours with his choice of savings account. HSBC's instant access savings account is currently paying interest of only 1.5 per cent a year, which falls to 1.2 per cent after tax. This is significantly below the rate of inflation - in real terms, he is therefore losing money.

Christoph should use his annual cash individual savings account allowance. This will allow him to invest £3,000 a year in a tax-free deposit account. HSBC's cash ISA is currently offering 4.27 per cent a year, although it's possible to improve on this by choosing another provider.

Christoph can move another £3,000 into a new cash ISA when the next tax year begins on 6 April 2006. In the meantime, the savings he can't currently protect from tax can at least be switched to a better-value account. If he's wedded to HSBC, its Regular Saver product is a good deal. It would allow him to invest up to £250 a month - the money must be moved from an HSBC current account - and earn 8 per cent during the first year.

However, Adam thinks Christoph should consider using an internet savings account to get the best deal on all his cash. Some online accounts currently pay 5 per cent before tax, and while tax will be due - at the basic rate, in Christoph's case - this will be a secure home for capital with a decent rate of return.

PENSION

Smith says Christoph is a member of a good pension scheme promising a pension linked to his salary at retirement. If the scheme stays solvent, this pension is guaranteed, whatever happens on the stock market or in other investments.

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

News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
politicsIs David Cameron trying to prove he's down with the kids?
News
Dominique Alderweireld, also known as Dodo de Saumure, is the owner of a string of brothels in Belgium
newsPhilip Sweeney gets the inside track on France's trial of the year
PROMOTED VIDEO
News
Cumberbatch was speaking on US television when he made the comment (Getty)
people
Life and Style
tech
Arts and Entertainment
Tom DeLonge, Travis Barker and Mark Hoppus of Blink-182 pictured in 2011.
musicBassist Mark Hoppus and drummer Travis Barker say Tom Delonge is 'disrespectful and ungrateful'
Sport
football
Arts and Entertainment
Olivia Colman and David Tennant star in 'Broadchurch'
tvBroadchurch series 2, episode 4, review - contains spoilers
Sport
cyclingDisgraced cycling star says people will soon forgive his actions
News
Britain's Prince Philip attends a Garden Party at Buckingham Palace in London
people
Arts and Entertainment
Ed Sheeran will play three sell-out gigs at Wembley Stadium in July
music
News
i100
News
Lena Dunham posing for an official portrait at Sundance 2015
people
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Finacial products from our partners
Property search
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

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Day In a Page

    Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

    Auschwitz liberation 70th anniversary

    Woman sent to three Nazi death camps describes surviving gas chamber
    DSK, Dodo the Pimp, and the Carlton Hotel

    The inside track on France's trial of the year

    Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
    As provocative now as they ever were

    Sarah Kane season

    Why her plays are as provocative now as when they were written
    Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

    Murder of Japanese hostage has grim echoes of another killing

    Japanese mood was against what was seen as irresponsible trips to a vicious war zone
    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea