Ask the experts - your questions answered - October 2006

He is now suffering from dementia and requires nursing care at home. He is due to have a means assessment of his capital and assets so the local authority can assess whether he is liable to pay the full cost of his care. My assets are not taken into account. As the bonds are in my husband's sole name, can I legally protect my share of our investment so it is not included in the means assessment? I have power of attorney over my husband's affairs. I would appreciate your advice in this regard.

Local authorities normally look at any assets held in the name of the individual requiring care and therefore the premium bonds would be assessed as belonging to your husband. Even if you could prove that they were intended to be held jointly, for example by showing the money to purchase them came from a joint bank account, you may still have difficulty convincing the local authority.

For further information on paying for care at home, Age Concern has a very helpful factsheet on the subject called Paying for care and support at home (Factsheet 46), which can be downloaded from their website: http://www.ageconcern.org.uk/AgeConcern/fs46.asp

If your husband is not claiming for it already, he may be able to claim Attendance Allowance, which isn't related to income or savings.

Donna Bradshaw, IFG Financial Services

3. James Neill, Scotland: When I was a student I recieved a covenant from my parents. They paid me a set amount and because they paid tax and i didn't I recieved the amount of tax that my parents paid to the goverment. My question is, is there still a system of covenants that I can use for my children where they will receive the tax amount? Thank you

This type of deed of covenant set up by parents used to qualify for tax relief; however, the rules have changed and non-charitable covenants (which this type of covenant is) set up on or after 15th March 1988 do not qualify for tax relief.

Donna Bradshaw, IFG Financial Services

4. In the event of a problem at a Bank, how much are private savings covered up to?

As a consequence of Northern Rock's plight there has been a slight amendment to the Financial Services Compensation Scheme rules. The compensation limit that now applies is £35,000 to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold.

Prior to 1st October 2007 the maximum level was 100% of the first £2,000 of your total deposits and 90% of the next £33,000, resulting in a maximum payment of £31,700.

The on-going uncertainty in the banking world should serve as a further reminder that the banks and building societies that feature at the top of the 'best buy' tables are not necessarily the most financially secure. Where larger amounts of money are involved, it can make sense to diversify and accept a slightly lower interest rate for increased security.

Jason Witcombe APFS, CFPCM. Chartered Financial Planner, Evolve Financial Planning.

5. James, Kensal rise, london asks: Would you recommend putting a lump sum into a funds shares ISA at the moment with the current financial turmoil going on? or would you say drip feeding it over a few years could prove more profitable when taking at least a 10 year view? Cheers

I think that you should invest when the money is available rather than try to time the market. Doing that has been compared to trying to catch a falling knife. You will only know at a later stage whether you should have fully invested or drip-fed, by when it's too late!

The important thing is to have some short-term emergency money, so that you do not have to dip into your medium-term, shares-based investments. Then you invest over a wide variety of different types of assets, which should meet your objectives.

One of the benefits of the Internet is that Independent Financial Advisers can now access powerful allocation tools, previously only available to Fund Managers. So do make use of these advances in technology, which help answer some of your concerns.

Paul White, Belgravia Insurance Consultants

6.Rob, Orpington: What's the best place to put regular savings of around £100 a month taking a 10 year view when thinking about paying towards school fees/university? I dont' mind taking a medium to high level of risk. I understand you can't give advice based on my circumstances as you don't know them, but general pointers towards funds/bonds/mixtures would be appreciated. Thanks

I would argue that you should diversify across all world markets rather than just investing in, say, the UK as many people do. Also, research shows that adding an element of fixed interest exposure can reduce volatility considerably but with only a relatively small effect on long-term performance.

You should be aware that most 'actively managed' funds will have an initial charge (probably around 5%) and an annual management charge (probably in excess of 1.5% p.a.). If you were to adopt an index tracking strategy, you could find funds with zero initial charges and annual management charges of well below 1% p.a. Charges can make a really big difference to performance.

Fund supermarkets such as Fidelity Funds Network and Cofunds can work well for investors as these give you the opportunity of spreading your investment across various fund managers.

If you are not already using your ISA allowance, this could be away of making the portfolio tax-efficient.

Jason Witcombe APFS, CFPCM. Chartered Financial Planner at Evolve Financial Planning.