Savings & Investments Case Study

Steve and Pauline Philips, contacted LR Financial Services and asked for a review of their savings, an appointment was arranged at a mutually convenient time at their home.

After an initial period, where we discussed what Steve and Pauline done for a living, what their income was, what benefits their employer provided

As Steve’s position at work was “Full on” at the moment and will be for about five years, he trains apprentice engineers, after that he wants to take a back seat. Pauline, however, is the office manager in a family company and is in the process of teaching her new assistant.

The conversation came around to the subject of their savings and what they wanted and when, Steve and Pauline both wanted to travel, but did not want to use up all of their savings, they both got five weeks holiday a year and thought it would be nice if they could have a two-week holiday somewhere nice and then be able to take long weekends and see European cities every three to four months.

We discussed how much they thought they might need to pay for their big holiday and the long weekends away and they thought that they would need about £2,500 – £3,000 for the big holiday and may be £700 – £750 for each long weekend. We asked how much interest their savings are making in their bank and building society and after checking, Steve said around £900 per annum.

It was estimated that, in total they would like to visit 10 cities and being conservative, this could be over 5 years then they would need to spend £7,500 plus £15,000 for the big holidays, giving a total of £22,500.

Following the completion of their Investment Risk Questionnaires, it was agreed that both Steve and Pauline were prepared to take a Low-Medium risk and that if they could achieve a reasonable return from the investment they would be happy.

It was agreed that they should keep some of their saving in their ISA accounts (for emergencies) and invest the remainder into a joint unit trust and to then top up their investment ISA each tax year to make the investment as tax efficient as possible.

By building a portfolio of funds, which invested in equities and interest-bearing assets, they are able to utilise their £1,000 per annum savings allowance (£1,000 each) and their dividend allowance £2,000 each).

So far Steve and Pauline have seen Rome and Prague and been to Mexico for their big holiday and to date they have not used their capital. We meet every year to review their investments and they are now planning to see Barcelona and Lisbon.