Until now, the events and marketing manager for Old Spitalfields Market in east London has focused on stashing away spare cash from her £50,000-a year-salary in savings accounts. Yet despite the volatile market conditions, she reckons it's time to consider ploughing some of her money into shares.
"The rocky market makes it a good time to invest," says Susan, from Croydon, south London. "And while the crisis is understandably making investors nervous, I'm not close to retirement so can give my money time to grow and see it through."
At present, she has £5,000 in an online savings account with Egg, which pays 6.55 per cent including a 12-month introductory bonus of 1.8 per cent. She also has £3,000 in a cash individual savings account (ISA) with National Savings & Investments (NS&S) at 4.4 per cent.
"But I need to achieve the best possible return on my investments for a financially secure future, and perhaps these accounts don't offer the greatest growth," she says.
Susan also holds some 200 shares in Lloyds TSB bank, worth around £342 last week, and 800 in the utility group Scottish & Southern Energy, totalling £9,728. "These were both inherited, and I'm not sure whether to keep or sell them."
For long-term retirement planning, Susan has contributed to three separate pension funds, although at the moment she is not paying into any plans.
She has around £25,000 in personal pensions with both Windsor Life and Skandia, as well as a money purchase scheme with her previous employer, Intercontinental Hotels. She paid into the last of these funds for a few years, but is unsure of its value.
Susan bought her three-bed house 14 years ago for £65,000, and she hopes it is now worth around £250,000. She pays £500 a month for a 25-year offset mortgage at 6.45 per cent with Royal Bank of Scotland. "I've four years left on this," she explains, "after paying in regular lump sums to reduce its term."
For protection purposes, she forks out £75 a month for income protection with Phoenix Life. The policy promises to pay an income of around £1,600 a month if she is unable to work due to illness, redundancy or injury. She has life insurance with the same provider, paying £40 a month for around £190,000 of cover.
The cure
Riding out the recession with a small mortgage, decent earnings and the beginnings of a savings pot shouldn't be difficult for Susan, agree our panel of independent financial advisers (IFAs).
"She also has an admirable attitude to investment risk, as she considers the current market downturn an opportunity and isn't scared into inaction," says Martin Bamford from IFA Informed Choice.
Savings/investments
While Susan wants to create a long-term investment portfolio, she must first consider her cash accounts.
At first glance, she appears to be benefiting from a decent rate on her Egg savings deal. "But as a higher-rate taxpayer, interest after tax is reduced to 3.93 per cent, and down to just 2.85 per cent once the introductory bonus period expires," warns Mr Bamford.
She would be wise to shift some of this pot to the Egg cash ISA, paying 6.05 per cent with any interest earnt being tax-free, and she may be able to transfer her existing NS&I cash ISA money into this account to benefit from a higher rate. That is, unless she is keen to stick with the Treasury-backed savings body in light of the market turmoil.
Turning to Susan's share portfolio, Ajmer Somal from IFA Positive Solutions says she would be better off in equity income funds, although she could wait until stock prices have stabilised. These funds are traditionally less volatile than shares while still offering the opportunity for good long-term growth.
Danny Cox from IFA Hargreaves Lansdown recommends Invesco Perpetual Income and PSigma Income as funds with good track records.
Retirement
As a higher-rate taxpayer, every £100 Susan saves into a pension will cost just her £60 after tax relief.
Susan could sell her shares in Lloyds TSB and use the money to make a pension contribution, says Mr Bamford. "She would get higher-rate income relief to make up some of the fall in value in these shares over the course of the past year."
However, if she chooses this path it will mean crystallising that loss.
Shares are a long-term investment and there is every chance that in time the price of Lloyds TSB will rise again. No one can say how long this will take, however.
Whichever route she chooses, Susan needs to take a greater interest in her retirement fund. "Your forties and fifties are a crucial time to build funds for income in retirement, so it's vital to know the value and risk of any pension investments," says Mr Cox.
Susan's employer is likely to offer some form of pension scheme, even if it's only a simple stakeholder fund, stresses Mr Somal. If not, she should pay into a personal pension. A low- cost self-invested personal pension (Sipp) gives the greatest choice of funds, and she can consolidate her existing plans in this wrapper.
Property
Making regular overpayments on her mortgage has proved beneficial, reducing its term and leaving her in a good position during the property downturn.
"If she decides to try to sell in the future, setting aside some savings to buy a bigger property, without taking out a further mortgage, is advisable," says Mr Somal.
Once she has paid off her mortgage, Susan will be well placed to divert the money that was going on repayments into building up her portfolio of savings, investments and shares, the panel of IFAs agree.
The period after a mortgage has been paid off is often the key one in building a substantial retirement pot.
Protection
As a single person with no financial dependants and a small mortgage, paying £40 a month for life insurance is unnecessary. She may already have some cover through her employer, often referred to as death-in-service benefit, says Mr Cox.
However, the income protection policy is worthwhile, although it will only start to pay out once Susan has been unable to work for a period of three months. She should check that her employer will cover her salary for that time in the event of her being unable to work due to sickness or disability. "Alternatively, she should create an emergency fund equivalent to at least three months' expenditure to see her through before the policy kicks in," adds Mr Cox.
Deposit savings are normally the easiest and best route to achieving this rainy-day fund.
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