Wealth Check: 'We want to save more while investing ethically'

David and Liz Ford, both Quakers, are kept busy by work but try to make time for family and outside interests.

David and Liz Ford, both Quakers, are kept busy by work but try to make time for family and outside interests. Mr Ford is a school governor and helps manage a Quaker retirement home. Mrs Ford spends most of her spare time on DIY, decorating and gardening.

The Fords want to know whether they should cash in their investments or wait. They know they need to save more but are ethically minded and want to know where their money will work best. They also want to plan for their children to go to university, and leave college debt-free.

In terms of retirement, the Fords have several small pensions, which they are considering consolidating. They want to know whether they have enough life cover and whether they should consider private medical cover for themselves, as well as insurance for their three cats and dog.

We put their case to Darius McDermott at Chelsea Financial Services, Caroline Anstee at Destini Fiona Price and Tim Whiting at BestInvest.

DAVID AND LIZ FORD, BUSINESS CONSULTANTS

Joint salary: £57,600.

Debt: None

Property: Detached house. Moving to repayment mortgage with Co-operative Bank

Savings: £3,000 a year in a Smile cash Isa

Investments: Henderson SRI Isa; Henderson Isa Taxbeater. Friends Provident, 810 windfall shares. Endowment policies maturing in 2021 for £20,000, likely shortfall around £5,000.

Pension: Friends Provident; National Mutual; Standard Life.

Outgoings: £20,000 annually on school fees. Family holidays £4,000 to £5,000 a year.

PENSIONS

Mr McDermott says there is nothing wrong with making pension payments to several companies. As long as the Fords do not exceed their contribution limits, there may well be advantages to spreading the risk.

Ms Anstee says they should review their pension contracts, as old-style plans may no longer be competitive. They should also review the funds they hold in their pensions, to make sure they fit their risk profile.

Mr Whiting says it might be possible for them to switch to a pension plan that allows funds from several managers, in order to give their portfolio much-needed diversity. But whether that is viable depends on the exit charges for their existing plans.

LIFE ASSURANCE

Although the Fords have enough life cover to pay off their mortgage, Ms Anstee cautions that this is not enough to replace a lost income. A family income benefit would do this until their children finish university.

Alternatively, the Fords could arrange a policy, known as key man insurance, through their business. This pays a lump sum to tide the company over if either of them died. Ms Anstee recommends they also look at critical illness cover up to the amount of their mortgage, and permanent health cover for Mrs Ford. This would provide her with an income, should she be unable to work. For the pets, insurance at least means large vets' bills will be covered.

INVESTMENTS

The Fords want to take an ethical stance with their investments, but the performance of their funds so far has been poor.

Mr McDermott agrees the Fords' funds performed badly during the market downturn from 2000 to 2003. But he urges them not to abandon equity investment altogether - they should take a 15- to 20-year view.

He points out that few ethical funds have performed well recently. The Fords' Henderson funds have done badly, whilst the only ISIS/ Friends Provident funds he recommends are UK Prime, European Prime, Strategic Bond and Stewardship Income. The latter is an ethical fund. To find out more, Mr McDermott recommends the Ethical Investment Research Service website (www.eiris.org).

Mr Whiting says that given the constraints of ethical investing, they are unlikely to find a better-managed fund than the Friends Provident/ISIS Stewardship fund. But he is not keen on the Henderson funds and suggests the couple could cash them in and re-invest the money with a different provider. For diversity, Mr Whiting suggests the Fords should add some general, rather than ethical, funds to their portfolio.

SAVINGS AND COSTS

Ms Anstee says it will be difficult for the Fords to plan until they know which universities their children will go to, and what their accommodation options are.

Buying a property in a university town, and letting out rooms to fellow students, is one way to cut expenses. But Ms Anstee say the Fords should consider the location in the country carefully, as well as the hassle. In particular they should think about whether they would want a property in that location once their children graduate.

In the meantime, the best option is to continue to save. But Mr McDermott points out that their cash could work harder for them than it does as Smile, their current savings bank, pays 4 per cent on cash Isas, against 5.1 per cent for a postal Isa with Abbey.

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

Sport
football This was Kane’s night, even if he played just a small part of it
Travel
travel Dreamland Margate, Britain’s oldest amusement park, is set to reopen
News
news
News
Founders James Brown and Tim Southwell with a mock-up of the first ever ‘Loaded’ magazine in 1994
media
News
Threlfall says: 'I am a guardian of the reality keys. I think I drive directors nuts'
people
Voices
voices The group has just unveiled a billion dollar plan to help nurse the British countryside back to health
News
The Westgate, a gay pub in the centre of Gloucester which played host to drag queens, has closed
news
Finacial products from our partners
Property search
  • Get to the point
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

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

    The saffron censorship that governs India

    Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
    Prince Charles' 'black spider' letters to be published 'within weeks'

    Prince Charles' 'black spider' letters to be published 'within weeks'

    Supreme Court rules Dominic Grieve's ministerial veto was invalid
    Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

    How did fandom get so dark?

    Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
    The galaxy collisions that shed light on unseen parallel Universe

    The cosmic collisions that have shed light on unseen parallel Universe

    Dark matter study gives scientists insight into mystery of space
    The Swedes are adding a gender-neutral pronoun to their dictionary

    Swedes introduce gender-neutral pronoun

    Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
    Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

    Disney's mega money-making formula

    'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
    Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

    Lobster has gone mainstream

    Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
    Easter 2015: 14 best decorations

    14 best Easter decorations

    Get into the Easter spirit with our pick of accessories, ornaments and tableware
    Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

    Paul Scholes column

    Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
    Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

    The future of GM

    The greenhouses where Monsanto 'plays God' with the future of the planet
    Britain's mild winters could be numbered: why global warming is leaving UK chillier

    Britain's mild winters could be numbered

    Gulf Stream is slowing down faster than ever, scientists say
    Government gives £250,000 to Independent appeal

    Government gives £250,000 to Independent appeal

    Donation brings total raised by Homeless Veterans campaign to at least £1.25m
    Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

    The most borrowed book at Bank of England library? Oh dear

    The book's fifth edition is used for Edexcel exams
    Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

    Cowslips vs honeysuckle

    It's the hunt for UK’s favourite wildflower
    Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

    Did a botched blackmail attempt help Cyril Smith escape justice?

    A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss