KEVIN Simpson, a financial advisor for St Helens based Blue Trust, answers some commonly asked financial questions.
Q Given the state of the economy, I am looking for a low risk investment for growth. I will probably not need the money for approximately five to seven years.
A Currently interest rates are really low so you along with other people are looking for other areas to maximise your savings in a cautious way. If growth is the driving force you would normally be looking to speculate with your funds over the medium to longer term but given your cautious attitude the trade off is normally the growth that you are looking for. The normal areas for cautious investors are, Deposit Accounts, Gilts, and some structured products but again these areas recently have not exactly set the world alight with the returns. You could look at some Investment Bond products that give a Guarantee of return over a fixed period or a guarantee of capital security, but allow investment into the markets for growth. As with all of these important decisions take advice before you commit.
Q My mortgage payments are currently quite low and I was wondering when you feel that the interest rates will start to rise.
A You may not have noticed but mortgage rates have started to climb over the last few months with the best fixed rates being pulled by the mortgage companies and replaced by some rates that are slightly more expensive, I feel that this will continue with a creep upwards. If you feel that a rise in interest rates would cause hardship then look to fix your mortgage as soon as possible.
Q I am thinking of taking out an Equity Release Plan to give me some extra retirement money, what things should I consider.
A Unlocking the cash tied up in your home can be one way to raise money but this will affect your estate and therefore should be discussed with your family. This is a major decision and although this is a good option for some people it is not the right way for everybody. First of all do not confuse this with “Sale and rent back schemes” where you sell your home and pay a rent to the purchaser, equity Release is a different product. You should consider how much is needed, is it for income or a lump sum that is needed as both options are available. Consider if any benefits that you currently have are affected by the funds released. The most important thing is to take advice on this as it is too important not to.