Wealth Check: 'We want to see the world, but keep debts down, too'

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The Independent Online

Angeline and Richard Radley, from Acton in west London, are coming up to their first wedding anniversary and have few financial commitments.

Angeline and Richard Radley, from Acton in west London, are coming up to their first wedding anniversary and have few financial commitments.

They are not big spenders but, says Mrs Radley: "Our only big expense at the moment is travel. We are going to Singapore in June for a summer break and would like to travel more and may even want to live overseas one day."

They have no immediate plans to buy a house or car, as this would mean taking on large debts, but would like to step on to the property ladder within the next few years. We put their case to David Higgins at Glazers Financial Services, Chris Petrie at Christopher Charles Financial Services and Steve Martell at Benson McGarvey.


Occupations: IT specialist and assistant content producer at the BBC

Debt: Richard's student loan about £10,000

Salaries: £50,000 jointly

Property: None

Savings: £7,100 in Egg Savings Account (joint account - 4 per cent interest a year), joint contributions of £600 per month

Investments: None

Pension: None

Outgoings: (monthly) rent £750; bills £200; transport £150; groceries £120; going out £200


The Radleys are fortunate in having low debts. Mr Martell says that avoiding expensive borrowing - such as on credit cards or store cards - is a good habit the Radleys should keep up.


Our advisers agree the Radleys have made a good start to saving. However, their money could be working harder for them. Mr Petrie says: "I would suggest they use their mini-cash Isa allowances, which are £3,000 per person per tax year. If they act before the end of the tax year on 5 April, £6,000 can be moved into Isas and another £6,000 from 6 April. They could pay into that monthly." He suggests Nationwide's Isa, paying 4.25 per cent.


Mr Martell says the Radleys should not rule out stock market investment. They could put aside a further £3,000 each a year, or £7,000 with a shares-only Isa. Mr Petrie says the Radleys should be looking for funds that offer better cash returns, and suggests an equity income fund such as that from Credit Suisse. Mr Martell says that investing through a fund supermarket - which gives access to a range of investment houses' funds within one Isa - will spread the risk. Because investments always involve some risk, he says that the Radleys will need to take a seven-year view of any stock market plans.


Mr Higgins says that although the Radleys are young, they should plan a pension. "The premiums that are paid in the early years will work hardest and reduce the overall amount that they need to pay," he says. Mr Petrie adds that today's stakeholder pensions are flexible and allow payment breaks, for example to go travelling.


Although the Radleys have no immediate plans to buy a home, Mr Higgins feels that it still makes sense to start putting money aside now. To give them the pick of the mortgage deals, they will need to save at least five per cent of the property's value, as well as allow for stamp duty, land tax, and legal and survey fees. Mr Martell suggests earmarking funds for moving costs. And now could be a good time to take out income protection or critical illness cover, as premiums rise with age.

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