Since you ask.
Your money queries are answered by Peter Rutherford, chief executive officer of Rutherford Wilkinson plc, independent financial advisers.
I am 36 and have recently joined a company which has closed its final salary pension scheme to new employees, so I can only join a money purchase group personal pension scheme they have put in its place.
They will pay 8% of my basic salary if I pay 5%. I intend to join, but there are different investment options . I have narrowed it down for me to the Managed fund or a Lifestyle fund. Can you clarify the difference between these funds.
The managed fund will typically invest across all asset classes, with most in UK equities, some in overseas equities and the balance in fixed interest securities, commercial property and cash.
You will need to decide as you approach retirement when to switch out of this fund because, most being in equities you would not want the markets to crash just before retirement as this would mean accepting a lower pension or deferring retirement.
The lifestyle fund will typically have you 100% in equities while you are young, but some 15 years from your intended retirement date gradually switch you out of equities and into fixed interest and cash. As you reach retirement there would be little or nothing left in equities so you would be safe from stock market falls. In both cases regular monitoring is required to meet your changing circumstances.
Mrs SL from Westerhope asks:
I have put pounds 3,000 into my mini cash Isa for this tax year. I can still afford to save about pounds 250 per month to build up a lump sum, but I do not want to take any risks. What can you suggest?
I suggest you look at what your existing bank and building societies have in the way of regular savings accounts as often you can get better rates by making a regular commitment.
For example, at the time of writing the Halifax have a 7% gross one-year fixed rate savings scheme with a minimum of pounds 25 per month and maximum of pounds 250 per month. Twelve monthly payments have to be made and on the anniversary the capital and interest are switched into a Halifax instant access account. Tax of 20% would be deducted from the interest, which can be reclaimed by non-taxpayers, but an additional 20% tax would be payable by higher rate tax payers.
Mr RP from Newcastle asks:
My business partner and I are talking to our bank about a business loan which we plan to repay over 10 years.
They are insisting that we take out life assurance to cover the loan, but the quotes they have given us look very expensive. We are concerned that the bank may look less favourably on our loan request if we do not take out the cover through them.
You are free to shop around, and the case to put to your bank manager is that he should expect any prudent businessmen to do so.
An independent financial adviser will be able to do this for you as they have access to the entire market and I would expect that the joint life first death decreasing term assurance you require can be obtained far cheaper.
* Investors Guide, is a booklet with information on all aspects of investment and is available to readers. For your free copy, freephone (0800) 074-5489 or write to me at Rutherford Wilkinson Plc, 21-23 Bridge Street, Morpeth, Northumberland, NE61 1NT. Please also write with any queries you would like answered. Rutherford Wilkinson Plc is authorised and regulated by the Financial Services Authority.