flow chart: 1. make yourself comfortable

Clifford German
Tuesday 30 January 1996 19:02 EST
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Planning your finances used to be one of life's optional pursuits. It is now compulsory if you want to end up comfortable in middle and old age without winning the lottery, playing soccer for Newcastle or topping the charts for several years.

Financial obligations start as soon as we acquire dependents - which, these days can be anything from partners and children to elderly relatives. Life insurance is traditionally the first priority, often combined with an endowment policy to pay off the mortgage. Property and mortgages are historically cheap in real terms, but pensions are pushing up the list of priorities. Unless you have a fat-cat salary, you may need to invest more to make up for job changes and take advantage of the tax relief on contributions. Start before you are 30.

Investments are lower down the priority scale but are usually more fun. You can start investing seriously with lump sums as small as pounds 500, or regular monthly investments of pounds 30. Investments divide into risk-free and guaranteed on the one hand and degrees of risk and reward on the other. Tax-free investments attract high-rate taxpayers, and ease of access is an important consideration.

Each week, the flow chart will help you match your personal circumstances to the range of financial services available, whether it is a pension you need, or life insurance or simply a better way to save.

CG

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