Wealth Check: Time out to raise a family so the savings must go to work


The patient

Time off work to raise a family has left Emma Bagnall, 42, anxious about her finances. Emma, from Highbury, north London, is a graphic designer but has not worked since May last year. In place of a salary, she receives 1,000 from her husband every month. This sum is used to provide for their two children, Jonas, six, and Albie, three, and pay household bills.

"I was contributing to my own savings accounts and pension plans regularly, but stopped when the children came along," she says. "I hope to pay into them again soon as I think it's important to have a separate pot of savings to your partner."

So far, she has built up a good sum in various places, with 22,000 in an Icesave instant access account paying 6.3 per cent. She also has 400 in an individual savings account (ISA) with Chelsea Building Society at 5.35 per cent.

As well as cash savings, she holds some equity investments, with 5,600 in a with-profits bond at Scottish Widows. But this has proved a poor performer, as her original investment was 5,000 eight years ago. In contrast, she put 7,000 in the Jupiter Income Trust five years ago, which has soared in value to 11,900 and is wrapped in an ISA.

Fortunately, Emma has no debt and benefits from living in a mortgage-free home. The family's four-bed house was bought in February 1999 for 335,000 and is currently worth around 700,000.

She also has several separate pension plans from previous employment.

"I feel I have so many bits of pensions everywhere," she says. "And I worry that I don't understand the plans or their performance."

She has 12,200 in a Norwich Union stakeholder through an old employer, along with 27,760 in a personal pension with HSBC. She also has a total of 47,500 in three separate Friends Provident personal plans, which she has held since the early 1990s.

Emma has no protection policies in place.

The cure

Erratic working lives, including time out to raise a family, often leave women struggling to set aside long-term savings consistently. But Emma is in a stable financial position and our panel of independent financial advisers (IFAs) stress that, with a bit of tinkering, her portfolio should produce better returns.

Savings/investments

Emma should ensure her investments are as tax-efficient as possible. When she can, she should use her annual tax-free ISA allowance of either 3,000 for a cash account or 7,000 for an equity ISA (3,600 and 7,200 respectively from next April).

"She should transfer money from the Icesave account to use this year's ISA allowance," says Caroline Hawkesley of IFA Evolve Financial Planning.

Some of her cash savings could be drip-fed into a unit trust to plan for any school fees, adds IFA Matthew Woodbridge from Chelsea Financial Services.

Emma's with-profits bond has not even kept pace with inflation. Moving this money would be wise, so long as she doesn't suffer a hefty exit penalty.

Retirement

Pooling her pensions will make them more cost-effective, agree the advisers. As a possible home, Mr Woodbridge recommends a self-invested personal pension from fund supermarket Cofunds. "Housing it all under one roof will also make it easy to monitor performance and switch to less risky funds as she nears retirement," he says.

But before transferring the money, she should check if this means giving up any guarantees. She should also watch out for punitive exit fees, warns Colin Rothery of IFA Throgmorton Financial Services.

Protection

With two young children, life cover is essential if either Emma or her husband were to die, says Mr Rothery. A whole-of-life policy, paying out a lump sum on death, can be put into trust so any proceeds are outside their estate for inheritance tax purposes.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Life and Style
Mark's crab tarts are just the right size
food + drinkMark Hix cooks up some snacks that pack a punch
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
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

    Selby Jennings: Quantitative Research | Equity | New York

    Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

    Selby Jennings: SVP Model Validation

    Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    Day In a Page

    A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

    Christmas without hope

    Gaza fears grow that conflict with Israel will soon reignite
    After 150 years, you can finally visit the grisliest museum in the country

    The 'Black Museum'

    After 150 years, you can finally visit Britain's grisliest museum
    No ho-ho-hos with Nick Frost's badass Santa

    No ho-ho-hos with Nick Frost's badass Santa

    Doctor Who Christmas Special TV review
    Chilly Christmas: Swimmers take festive dip for charity

    Chilly Christmas

    Swimmers dive into freezing British waters for charity
    Veterans' hostel 'overwhelmed by kindness' for festive dinner

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all