The maze of family finance

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The Independent Online
I have been interested to see the growing number of articles on family finance in the pages and supplements of our newspapers. More and more direct mail offers of complex financial products keep dropping through my letterbox and slipping out from the investment newsletters I read every month.

Many of the products are very difficult to understand. This made me wonder how many people really knew what they were buying and if they could see the branches (as opposed to the twigs) of the investment tree. Do they understand, for example:

The exact difference between the protection offered to depositors with a bank and a building society? Which is safer and why?

The main differences between investment and unit trusts? Which perform better on average and what are the main reasons?

The single most important investment criterion when considering the purchase of an investment trust share?

The tax advantages of a PEP mortgage compared with a conventional endowment mortgage? Which is better and why?

How have tracker funds performed compared with the market as a whole and the average unit trust? Are they a good buy?

How index-linked gilts work to protect investors' capital and income against inflation? Are they a good investment?

The questions to ask when appointing a new financial adviser?

How to invest in unit and/or investment trusts to minimise the risk of another market crash?

I know that many people will not know the answers to all of these questions. It occurred to me, therefore, that there must be a real need for a simple exposition on the subject of family finance. It was with these thoughts in mind that I have spent the past year writing my new book Investment Made Easy.

There are some excellent beginner's books on finance, such as The Beginner's Guide to Investment by Bernard Gray, How to read the Financial Pages by Michael Brett and the New Penguin Guide to Personal Finance by Alison Mitchell. However, each one of them approaches the subject from a different angle. I have tried to make mine an easy-to- read guide through the maze of financial products on offer - a book with a lighter touch (including 50 excellent cartoons by McLachlan) that might also appeal to younger people leaving school or university and give them insight into the vital aspects of personal finance.

With popular interests like cookery and gardening, enthusiasts do not hesitate to read several books a year. Family finance should command even more attention as it is so germane to the financial health of the reader.

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