Ask the experts - your questions answered - November 2006

Q I'm worried that my house has developed subsidence after the hot summer as I can see a crack in the wall. Please tell me what to do. I have both house and contents insurance. I only moved in a couple of years ago and the survey said nothing about subsidence.

Justin Modray, Best Invest, London
A. Call your home insurer and ask their advice. They will likely send a surveyor to inspect the property and confirm what work, if any, is necessary and whether you are covered (very likely you will be). The original surveyor may have been negligent, you could potentially pursue a claim against them if you insurance does not cover the work.

Adrian Kidd, Mint Financial Services, Lee, London
A. Some older houses have cracks in the walls, it would be dependant on how deep and wide it is to qualify as subsidence. The best thing to do would be to look over your policy documents, call the provider or adviser who advised on the policy. Most will have around £1,000 excess on them as standard but if you have not done anything to accelerate the subsidence you may have cause for claim. You may also wish to get another survey done by a local expert to get a 2nd opinion.

Q. I've just applied to Experian and Equifax for my £2 credit record via the internet - one posted me the details quite happily. The other one is now insisting that I send them proof of where I live by sending them copies of bills and bank statements. This seems very odd to me - have you any idea of why this might be?

Justin Modray, Best Invest, London
A. They are simply trying to prevent identity theft and fraud, unfortunately an increasingly common crime. While it’s a pain to send the statements, they do have your best interests at heart.

Adrian Kidd, Mint Financial Services, Lee, London
A. More than likely the Data Protection Act and to help prevent against identity fraud. Your reports will have all your financial details on so although a bind, it could protect you hugely going forward. Not a bad thing at all.

Q. I've just had a baby and I didn't pay any attention to all that stuff about child trust funds when it all kicked off as there was no baby on the horizon! So now I haven't a clue. When can I expect to get my voucher and where should I put it? I'm really not sure about savings or shares being the better bet - what would you advise? I'm not sure whether I'll be able to top it up myself.

Keith Churchouse, Churchouse Financial Planning, Guilford
A. To receive a Child Trust Fund voucher (£250) you must first be receiving Child Benefits. The voucher should appear shortly after that along with an information pack on the different types of account available. My preference is a “Stakeholder CTF account” due to the low charges.

You, your family and friends can help your child's account grow, and make your own contributions to the money already put in by the Government. For further information see http://www.childtrustfund.gov.uk

Justin Modray, Best Invest, London
A. You should receive your voucher shortly after registering for child benefit. I would suggest investing it in a stakeholder CTF, as the money will be invested in stockmarkets, giving good potential for growth, initially before being moved into safer investments as your child approaches age 18. The Family Investments Stakeholder CTF is a good option as it invests globally and is managed by New Star Investments, one of the City’s top fund managers. Alternatively the F&C Stakeholder CTF tracks the FTSE All Share Index and is the best value option if you would prefer a tracker to active fund management.

Q. I am just about to start university. Can you tell me what the best bank account is? And should I be putting my student loan in a high interest savings account? I'm really confused about the best thing to do and worried about getting into huge debt.

Justin Modray, Best Invest, London
A. Don’t just plump for the account that offers the best freebies. If you think you’ll need an overdraft (you probably will) then compare overdraft limits along with interest and other charges. Putting the student loan into a high interest account until required is a good idea, as at least you’ll earn a decent rate of interest meanwhile. An Internet based account would probably suit you as the rates tend to be competitive and you can simply transfer the money to your student account as and when required. If you’re a non-taxpayer (likely) then complete a form R85 so that tax is not deducted on interest before it’s paid to you. To avoid building up large debts set a sensible weekly budget during your time at university, stick to the budget and you won’t go far wrong.

Daniel Clayden, Clayden Associates, Devon
A. Don’t confuse the issues of debt and getting the best out of your savings. All of the major banks offer Student Current Accounts – most either charge low overdraft rates but offer low rates of return on credit balances or higher interest rates when in the black (however the best is still only 2%) but also charge higher rates on overdrafts. I would open a separate no notice savings account for any grant or student loan payments to get the best return on your savings and then look at the Student account offering the best (authorized) overdraft rate and amount which meets your requirements – but make sure that you don’t exceed the overdraft limit or you will incur higher charges. Disciplined budgeting is required to prevent borrowings spiraling out of control into a massive debt – and the exercise of regularly moving money from your saving to your current account will help you keep a handle on things.

Q. I've got some money in the INVESCO Perpetual European Growth fund as an Isa - I put it in when it was flavour of the month more than five years ago but it still seems to be languishing - fortunately it wasn't huge sums about £500. I also have the Income and Growth fund should I transfer it there or choose something else for either or both of these funds?

Keith Churchouse, Churchouse Financial Planning, Guilford
A. The Invesco Perpetual European Growth fund is currently a 2 star rated fund, but the income and growth fund is a 4 star rated fund. However over the last two years the European Growth fund has had a greater return. It is important to diversify your investments across various sectors and therefore I would suggest it may be appropriate to maintain your holdings in the different sectors to ensure that you have some diversification.

Justin Modray, Best Invest, London
A. The fund has improved a little of late, but it’s along way from re-claiming its former glories. If you want another European fund I’d suggest switching to Gartmore European Selected Opportunities or Cazenove European, both are run by very talented managers. The Income & Growth fund has performed reasonably well, but I would suggest Invesco Perpetual’s Income fund is a better option. If these are the only two investment funds you own then consider switching both into a fund with a much wider spread of investments, such as Midas Balanced Growth, as this will better protect you during rocky stockmarkets.

Daniel Clayden, Clayden Associates, Devon
A. The INVESCO Perpetual European Growth fund has indeed historically languished in the lower half of its sector but its recent fortunes have picked up, but you are not comparing like with like when you look at the Income & Growth fund which is in the UK Equity Income sector as opposed to the Europe excluding UK Sector. You should contact an IFA who can help you review your investments before you make any to switch. This advice would normally be based around a number of factors specific to your individual circumstances – such as the need for income versus growth, your risk profile, tax status and investment timescale. Other considerations may be the costs incurred for switching against other options available such as transferring to another ISA manager of re-registration with a fund supermarket.