Wealth Check: 'I want to make what money I have work hard'

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Jessica's Intelligent Finance individual savings account - which contains £6,500 - helps, although she sometimes feels like she is paying to do her job.

For 10 years, Jessica's mother has been paying into a CIS endowment policy. Jessica can have access to this when she is 25, by which time it will be worth £1,100.

Jessica would like to know how to make her money work harder. Should she leave her cash reserve where it is? And is it worth being paid in euros?

We asked three independent financial advisers: Lisanne Mealing of MD Associates, Lisa Lipizzi of Baronworth Investment Services and Susan Hannums of Chase de Vere.

Case notes

Jessica Shanks, 23, tour rep, Italy

Salary: £129 a month plus £300 living expenses and sales commissions.

Monthly expenditure: Usually spends all her monthly income.

Savings: £6,500 plus CIS endowment policy of £1,100 available in two years' time.

Debts: Student loan of £10,000.

Pension: Jessica can't afford contributions to her company's pension scheme.

BUDGETING

Hannums says that, considering Jessica'searnings, she is probably no stranger to budgeting. If she is determined to save, she should set out a budget and stick to it. As she works abroad she can no longer contribute to her ISA, so she would have to look at an offshore savings account - more than 30 UK-based building societies and banks offer deals.

SAVINGS

This is clearly a difficult situation, says Mealing. Love of work or love of money? Should Jessica continue as a resort rep or move up the career ladder, sacrificing her lifestyle for better pay?

The interest rate on Jessica's cash ISA could be improved by switching to another provider, such as Alliance & Leicester, which offers4.5 per cent. She could also consider splitting her £6,500, keeping some emergency funds in the cash ISA account and putting, say, £5,000 into a stocks and shares maxi ISA for the longer term. Investing via a fund supermarket such as Cofunds would give her access to more than 800 funds and 50 fund groups.

The choice of ISAs depends on Jessica's plans, adds Lipizzi. If she is happy to put the endowment policy's proceeds into an ISA for, say, five years-plus, an equity-based ISA would suit best. But if she may need the money quickly, then a cash ISA is better.

Jessica has several investment options, all with some risk as they involve equities and bonds, says Hannums. There are cautious managed funds, which are restricted to a maximum 60 per cent in stock market holdings.

These are popular with investors wanting to limit their exposure to the downside of holding shares. The fund manager invests the rest of the money in bonds and gilts. Recommended funds include Investec Cautious Managed and Gartmore Cautious Managed.

PENSION

As soon as Jessica can afford to join her employer's pension scheme she should do so, advises Mealing. This will make it much easierto accrue retirement benefits.

She also needs to explore other possibilities. For instance, income replacement is beneficial to young, single people in the event of illness or accident. If her employer doesn't offer this, maybe her parents could help meet the cost. Less than £8 a month buys cover of £6,000 a year.

WORKING ABROAD

Lipizzi says if Jessica were paid in euros, and wished to convert to pound sterling, she might lose out due to the exchange rate.

There may be tax advantages for Jessica in being paid abroad, says Mealing. She might save on UK tax, depending on her employer and employment package. As Jessica may be overseas for some time, this could be worth exploring.

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