Personal Finance: The best tips in life are free

Baffled by the black art of financial planning? Jessica Leigh reports on where to go for advice

FOR MANY people on modest incomes it can be a struggle just to pay bills, let alone "make your money work for you". As soon as you start to read about money management and investment strategies, you are baffled: you don't know your "steady growth" from your "high risk". But a bit of research can prepare you for your first steps into saving and investing. And it's all free.

Although it may be tempting to head straight to your bank or building society for advice, most of these institutions only sell their own products. Visit a variety of banks and building societies and see what you can pick up, then phone and ask them to send you their basic literature. Although you may end up on a mailing list, the comparisons will give you a feel for what's on offer and help make sense of financial jargon.

Most banks will suggest a one-to-one interview about your finances, but this is not ideal for those who can't even face a bank statement. Feeling insecure means you could fall prey to a sales pitch. Companies like Virgin Direct ease the dilemma by offering free interviews with "money managers" over the phone. Again, they can only recommend their own products, but if you buy direct you aren't paying commission to a sales person.

Most banks and building societies now have websites which answer preliminary queries and provide good basic information on anything from opening an account to getting a mortgage. Again, advice will be restricted to their own products, so compare their offers with those of other financial information suppliers. Moneyworld (ww.moneyworld.co.uk) has a good range of information and articles, as does Interactive Investor (www.iii.co.uk).

To avoid the limitations of tied advice (financial selling linked to one organisation), you could see an independent financial adviser. IFAs have access to the full range of products on the market and are bound by law to offer the best ones for your circumstances. They must also tell you how they earn their money. They may offer you free advice and take commission from product suppliers, or they may charge a fee whether you buy or not but give any commission back to you. IFA Promotions can help you find a qualified IFA.

Trade organisations are a good source of free advice. Autif is the trade body for unit trusts and the AITC backs investment trusts. Both are brilliant at advising first-time financial planners and will send you extensive financial fact sheets. Their fund information is well organised, including performance graphs, investment returns and how much you have to put into a fund. Contrary to popular belief you don't have to be rich: some plans start at pounds 20 per month. Autif and the AITC are neutral so cannot direct your decisions, but their information is comprehensive enough to help you to make one yourself. They can also recommend an adviser.

There will be huge changes in April when PEPs and Tessas are replaced by individual savings accounts. A free guide from fund manager M&G explains everything.

Pensions will be one of your longest-term investments, so make the best possible arrangement. This is particularly important for women, who tend to earn less, spend more on others, live longer and take more career breaks than men. Fee-based adviser Chartwell has a guide to cheap and flexible personal pensions.

Whatever your income, ignorance is a false economy. Banks, credit-card companies and life insurance sales people can charge huge interest rates on ill-considered financial commitments without having to alert borrowers to the consequences. Just a few hours' investigation can open up a range of options and opportunities, some of which you may never have considered.

contacts

IFA Promotions, 01179 711177.

Autif, 0181-207 1361.

AITC, 0171-282 5555.

The Unit Trust Information Service, 0181-207 1361.

Money Management Register of Fee-Based Advisers, 01179 769444.

National Savings Information, 0645 645000.

Chartwell (pensions guide), 01225 446556.

M&G (ISA guide), 0990 559900.

Financial Services Authority (watchdog), 0845 6061234