Money Box Live phone-in - 4 September 2000 3pm (BST)

THIS TRANSCRIPT WAS TYPED FROM A RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT. BECAUSE OF THE RISK OF MISHEARING AND THE DIFFICULTY IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS THE BBC CANNOT VOUCH FOR ITS COMPLETE ACCURACY.

Tape Transcript by JANE TEMPLE

MONEY BOX LIVE

Presenter: Vincent Duggleby

Guests Elisa Bayer and Graham Hooper

TRANSMISSION 4th SEPT 2000 1500-1530 RADIO 4

ANNOUNCER : Now it's time for the first in a new series of MONEY BOX LIVE with Vincent Duggleby.

DUGGLEBY Good afternoon, and it's good to be back for another series of MONEY BOX LIVE - the programme where your calls set the financial agenda and we do our best to provide the answers. And as if to anticipate the subject of our first programme, the UK stock markets reached a new high for the new again today. By all accounts the market's being driven by the enthusiasm of small investors - justified or misplaced? You can call Money Box Live on our usual number - 08700 100 444 We're not just talking about shares though - you can spread the risk through unit trusts and investment bonds, but as we explained in the last programme before the summer break beware guarantees that may not be quite what they seem and if for example your favourite tracker fund - you need to decide which index to track. And even if you fancy your chances at stock picking, there are many sectors of the market, notably the banks that are way below their best levels. Interest rates are another important factor - they've been rising in Europe and the United States. Here they've been unchanged since February at 6% and opinion seems to be hardening in favour of an increase sooner rather than later - we shall see on Thursday what the Bank of England's Monetary Policy Committee decides. While the pound remains strong against the Euro, it's at a seven year low against the dollar - inflation's also been creeping up, and as the politicians return the fray, markets I'm sure will increasingly be influenced by electioneering. The number to call 08700 100 444 And with me in the studio Elisa Bayer, director of private finance at the stockbrokers Greig Middleton and Graham Hooper, a director of the independent financial advisors Chase De Vere. And Michael you've got the first call in the new series from Manchester.

MICHAEL If buying shares is the right policy and that is a question - what now - now - what sector should it be in and for quick in and out or long term?

DUGGLEBY Mmm - Elisa I read you at the weekend pointing out the market was actually being driven by a remarkably small number of shares?

BAYER Well I think that continues to be the case, and what's interesting is I came back on holiday the 22nd August - and in ten days there has been this huge increase in the market with the telecomms, the IT stocks and the media stocks all turning around, and nothing else moving much at all. The Marks, the Lloyds Bank - all those are down, so I think you've gotta be very careful. If you're going to go in and out, you must do it I think, if you're going to do it through a broker or online or via the Internet, you must do it at limits, because the prices are really moving, and the quotes are enormously wide. I mean CMG whose figures came out I think last Thursday, the price went up 145. So in and out you may get in, but if you get it wrong you will get burnt.

DUGGLEBY When you're talking about limits, you obviously mean you have to sort of set the price at which you're gonna buy and sell - will the broker do that for you?

BAYER You can - yes you can - I think what happens and where people got caught say - you know in the early part of the year and the end of last year when the market went up, they tried to leave overnight orders without a price, and very - the first lot of orders that come in because of the matching basis, and the orders at 4.30 - the quotes start to widen and people can get some very odd prices, and they see the price has gone up £1 and they suddenly see well they've only made 50p and then they start squealing, so be very careful and you know - I'm afraid if you are going to go in and out you've almost got to watch all day.

DUGGLEBY Graham is there any such thing now as a long term investor, or does it make no sense at all to tuck away the blue chips for the future?

HOOPER Well I think it does actually - I mean the first question is you know how long are you going to invest for - and if you're going to invest in the stock market you may as well have a long term view as a short term view, because in my experience 7 out of 10 investment decisions will go against you anyway, and it's just the way the market tends to go. So I think if you are going to be in shares, stick your money in there and ride out the - the peaks and troughs. You can get your fingers badly burnt by dipping into the market and going into the wrong sector of the wrong share at the wrong time when as Elisa says the market's gyrating around within the sectors as it as at the moment.

DUGGLEBY But as you pointed out Elisa I mean there are sectors which are clearly favoured by investors and you know it does seem to pay to run with the herd these days, not to try and sort of say oh gosh you know the banks must be cheap therefore I'll buy them because they could be cheaper next year?

BAYER Oh I think - I think that's absolutely - I mean you look at the famous Marks & Spencer and Graham and I were discussing it for minutes - I mean the price hasn't moved, and in fact today the market's up again -and you know Marks is down 2 - so I mean there are clearly shares you just won't to touch. But if you look at the Misys, and the Colts and the Semas and that I mean they really do move, but you've just got to be there right - the other thing is don't try and do it on borrowed money, and you may have to be there for the longer term if you get it wrong.

DUGGLEBY Graham a favourite sector of yours at the moment?

HOOPER Well I think there's one or two - you can't ignore the new telecomms - you know the TMTs - the telecomms, the media and technology and telecommunications - that sort of thing. You can't ignore that and it is a relatively new area - so if you have - have an old sort of share portfolio, I think you should at least have some sort of exposure there, because it will work. Now whether you want to go in and go for the individual shares or you want to go for a collective investment like you know technology, unit trusts or investment trusts, is really down to the individual. But yes I think you need exposure to - to those type of sectors at the moment with the momentum that's going on because they're now momentum driven - it's a herd instinct to fund managers, pension fund managers - that sort of thing driving these share prices.

DUGGLEBY I still wouldn't venture into - into a market looking for individual winners in shares unless I had a fairly solid base of collective investments underneath - you know the sort of good old generalist UK or international trusts - whatever you - just as it were to sort of keep you sane cos I think if you were to work in the market on the basis as Elisa said of going up and down 20%, not easy to sleep at night.

BAYER No it's bad for your blood pressure. But I mean I must say if you look at something like Henderson Global Technology, despite what happened in July/August - that fund ran pretty well. So I mean they must.

DUGGLEBY It did didn't it?

BAYER Be something to go for - you know that type of manager.

DUGGLEBY Okay - well we've spent quite a long time on that one but we'll now see what can do for Anna, or Susanna rather in Derbyshire.

SUSANNA Good afternoon. I have £6,000 in an instant access building society account, but the interest I'm getting is really pitiful. Is there any way I can get a better rate without losing the ability to get hold of some money at any time?

DUGGLEBY What rate are you getting?

SUSANNA Oh about 1% I think - dreadful isn't it?

DUGGLEBY Oh - Graham that must be - you know there are accounts that do that and they're usually ones that have been around for a time?

HOOPER Yes it sounds like you've been into an account that sort of laid dormant for a fair while and the institution whoever it is - building society has dropped the rate over a period of time.

DUGGLEBY Disgraceful really - I mean they should - they should ¿t do it?

HOOPER No well there's some - is it the BSCB are now sort of taking action I think on various banks that are doing this sort of thing, so you know you will have to - they will have to bring the rates and bring them in line with other better accounts that they've got. But coming back to your specific circumstances, interestingly enough a cash Isa may suit you to a certain extent. The maximum you could do would be £3,000 this year, but with Smile for example from the Co-op bank you'd get 7.25% and that is easy access so you're not going to lose anything in terms of instant ability if you like and you know you're getting seven times the interest rate on it.

DUGGLEBY It's worth reminding people that the Isa is not the same as the Tessa - the Tessa you couldn't get your money out, or at least you could get the capital out, but you effectively lost the concession tax concession if you did break the - break the contract whereas the Isa is different. The Isa really is - is instant access and no penalty for the tax reasons.

HOOPER Yeah it really is - you can put money in and take money out as you want subject to the overall limits, so it's very worthwhile thinking about in this - in this example.

DUGGLEBY But £3,000 is the maximum for your mini Isa which would only take care of half your money.

HOOPER The other half if you wanted to go on to do something with the other half for example again - Nationwide Building Society offer an Internet account with a minimum of £1 at 7% - so that's seven times.

DUGGLEBY And that you have to pay tax on that?

HOOPER You would do if you're a tax payer yes

DUGGLEBY Okay -

SUSANNA Thank very much

DUGGLEBY Right you are - we'll move on now to Robert in Luton.

ROBERT Hello there. My retired parents are having to move house due to my father's ill health. The question is if they sell their house before they find a new one to purchase, where would they put that lump sum from the sale of about £275,000 - a) for the highest rates of interest to pay for rented accommodation in the meantime - and with immediate access obviously if they find - then find a house to purchase?

DUGGLEBY Are they going to be trading down do you think - buying a smaller house?

ROBERT Unfortunately not because they're moving from a poorer area - you know a lower market area to a higher market area to be nearer the family.

DUGGLEBY So there's not going to be any capital left over once they've bought the new house?

ROBERT No they do have other investments but it's just what to do with that lump sum in the meantime.

DUGGLEBY Right - Elisa?

BAYER Well I'm always very nervous of money you've got to have back. Either I think you're going to put it into one of Graham's good savings account and no doubt he'll tell you the best rate, or depending I suppose if it was up to 6 months I might put it into a gilt edged stock - one that's going to redeem in about that time, but other than that I wouldn't do anything clever

DUGGLEBY Yeah I mean I suppose if it's going to be a very short period of time Graham - just purely convenience you might with that amount consider the money markets through the banks?

HOOPER Yes -

DUGGLEBY No the top rate of interest but I mean you can get it at one day's notice?

HOOPER Yes you can do. I mean the account we mentioned earlier - the Nationwide at 7% gross is really top of the pops at the moment. You can only go maximum interest enough into that of about £50,000 I think so you've got to be careful there. So you know that would take - take care of only a bit of it. But there are other accounts available. Abbey National for example - for a minimum of £2,000 instant access or easy access as we call it now - you know that's 7% gross as well. So there are these accounts out there, but you do have to look quite hard for them - you know just walking down the high street isn't going to do it for you.

BAYER Is it £50,000 per person though?

HOOPER Yes I think so

BAYER Yes - so that could be 100 yes

HOOPER Could be 100 - but you know they tend to be the Internet accounts that are offering the best rates at the moment as well.

DUGGLEBY If you do want a very simple way - you won't get the absolute top rate of interest, but I mean if you really don't know whether you're going to be needing the money in 2 weeks, 4 weeks or 6 weeks, then the money markets do cater for that sort of eventuality. And interestingly enough if it's over £50,000 as in this case it is, you get the interest paid gross - it's not tax free but it is paid gross. But the best rate of interest you'll get on that sort of money is probably about 5.25/5.5% which is not the top rate in the market - you're paying for convenience.

ROBERT Okay.

DUGGLEBY Okay?

ROBERT Thank you very much

DUGGLEBY Thank you very much for the call - now Valerie in Medway.

VALERIE Hello there

DUGGLEBY Hello

VALERIE Good afternoon. My daughter's just received a cheque for a little under £800 from an insurance policy which has matured. She'd like to invest it for a minimum of 2 years -hopefully a bit longer. She's 16, in full time education and hopes to go off to university - can you help us?

DUGGLEBY Yes - now this one is interesting because I imagine she would like to have the money available to her when she goes to university?

VALERIE Yes I think so

DUGGLEBY In a few years time. Graham - this is an interesting one - £800 - what can you do?

HOOPER £800 for 2 years yes - it's really a question of - it's tax free now - have income from the insurance company - I assume that you want to keep it tax free as far as she's concerned?

VALERIE I think so yes

HOOPER I mean she can't do an Isa cos she's under 18 - she can's do a children's bonus bond with national savings cos she's over 16. So you're caught in the horns of a dilemma really. I would sort of - I think your view is really determined by if she's happy to tie it up - what's your view of interest rates right now - and if you think the general consensus is that they're going to dip over that period of time you could put it into a fixed rate termed bond with a bank or building society and claim the tax back as - as a non tax payer, and you know the only think you'd give up then would be the accessibility to it. And at the moment the best rates are on a fixed term with Northern Rock at 7.?

DUGGLEBY Yes that's just come at - that's a very interesting one - it's a one year bond that?

HOOPER It's a one year bond - for a minimum of £1,000 and for 2 years if you're looking at 2 - some banks will offer you the best rate of about 6.75% gross - something like that.

VALERIE Oh that's lovely -

DUGGLEBY But you're reducing your risk on that. I take it Elisa you wouldn't recommend a 16 year old to venture into anything risky?

BAYER I'd like to suggest an investment trust though.

DUGGLEBY What for a couple of years?

BAYER Yes.

VALERIE Investment trust?

DUGGLEBY Yeah if you're going to do it you probably need to concern yourself with the cheapest way of buying it which Elisa would perhaps be going direct to the trust itself?

BAYER Yes you could do that, but I mean I think if you were going to take a 2 year view - you know something like say TR European or something like that would be a perfectly good thing taking a 2 year - you know 2 year option.

DUGGLEBY TR - TR is run by Henderson's?

BAYER Henderson's - yes

DUGGLEBY one of the big institutional managers - Henderson is a group that - that does have many different trusts, as indeed do a lot of the big Scottish institutions for example so you can reduce the risk by perhaps taking a more general fund or a UK equity fund so it's not just a matter of going to Europe - but you're taking Europe's a good things are you?

BAYER A good thing

DUGGLEBY Okay - well that will be a bit of risk but go direct to the trust - get them to send you a brochure, but remember that if - the money just might be worth less when you take it out, whereas Graham's view of 7% means you can work it out - it's what ever it is £50 a year in interest. So it'll be worth £100 more when you come to get - get it if that's what you want.

VALERIE Yes thank you very much

DUGGLEBY Okay and now to Bernard in Nottingham.

BERNARD Hello, good afternoon

DUGGLEBY Good afternoon. I have a relative who would be persuaded to go into an old peoples' home if their house was secure, and I had heard that there was an annuity that one could take out to cover the cost of - of an old peoples' home and thereby saving the person's house - is that possible?

DUGGLEBY Yeah I think you're talking about one of these long term care policies. Graham, there are two types I think aren't there?

HOOPER Yes one basically - one long term care? Basically acts like an annuity. You give the sum of money to an insurance company, and they will pay you almost an immediate income straight away to fund long term care fees, and the average long term care - or the average care home fees I think at the moment is something like £22,000 a year, so it's quite a steep amount to - amount to put into an annuity right there and then.

DUGGLEBY But if you - the earlier you do it of course the better the deal because they may not have to pay out at all perhaps?

HOOPER Absolutely yes. You do tend to find that the ones where you have a bit of time before it's immediately going into a nursing home - there's a bit of time for investment there - bit of time to catch up so you tend to have to pay less than going straight into the annuity type

DUGGLEBY Are we talking about somebody who's definitely going into a home now or?

BERNARD Yes

DUGGLEBY Right yeah you are - as Graham says the product does exist but is it good - is it a good value - is it a good value product cos I mean what's the average for staying in care - it's not more than a few years at most is it?

HOOPER Well part of the problem with these type of plans the claims experience is very, very limited because they haven't been around for very long so you know it's - I think it's only about 5 years, something like that on average, cos they tend to have these - these lifetime things that you have to do like be able to feed yourself, cloth yourself, cleanse yourself and all that sort of thing, and by the time you can't do sort of 4 out 6 of those

DUGGLEBY The activities of daily living I think?

HOOPER Absolutely yeah. Your - you know - it's difficult to look after yourself so you know immediately putting that money in you're gonna need a very, very high income, so consequently you need to put more money in straight away.

DUGGLEBY Is there anybody remaining in the house - is the husband or wife remaining?

BERNARD No the house

DUGGLEBY So it will be empty?

BERNARD It will be empty although they might let it I don't know - but there is - the person has their own private income - not private income but have their own savings.

DUGGLEBY But what happens when they run out I suppose that's the question?

BERNARD Well the thing is that what they'd heard, or what I've heard is that say they put about £30,000 into an assurance company and then got their fees paid for that and it saved their house?

DUGGLEBY Well yes that's probably - I don't think £30,000 would be enough for an instant - instant care plan.

HOOPER I don't think it would be no. I mean depending on the age of your relative, but you know bear in mind if it's anything like the average fees you're looking at - you know £30,000 to be paying out the average of £17,000 net isn't gonna last very long even with reinsurance and that sort of thing. So I'd you know look very, very carefully at the plans that are being put forward.

BERNARD Can you give me any - any particular companies that do this?

HOOPER Other than going to an IFA - independent financial advisor I mean the companies we'd be looking at the CGNU - Commercial Union - PPP do them - Private Patients' Plan that sort of thing - they tend to be the market leaders. Scottish Amicable have - Scottish Amicable European I think have an off shore plan but that tends to be the investment option rather than the..so you know it is a very, very limited market - limited claims experience so you know as Vincent says it is very much the question are you getting good value for money?

DUGGLEBY It's quite a difficult question to answer because there are obviously options as you - as you've thought about - perhaps renting out the property for the time being. I mean the - the - you also need to understand the way the State operates here because when savings fall below a certain level then you're not obliged to pay the fees - the State will come to help, but from the sound of things I'm afraid your house perhaps is worth sufficient to pay sufficient of the fees for the lifetime of - of the relative - not an easy question - wroth getting a quote but I wouldn't hold out too much hope because it maybe just too expensive and normally these plans we'd be looking at them for people who perhaps expected to go into care in 5 or 10 years' time when they do become much more - much more manageable.

BERNARD Right okay thank you very much

DUGGLEBY Thanks for the call and we'll go to Susan now in London.

SUSAN Oh good afternoon. I'd like to know if it's the right time now to put windfall shares into a ma - a maxi Isa?

DUGGLEBY Let's just get Elisa to explain what the rules are for Isas here - Elisa?

BAYER Well the point is Graham we were having a chat weren't we - on Peps you could put your shares in within 42 days and on Isas you can't is the answer.

DUGGLEBY You're literally not allowed to is that the rules prevent you from doing so?

HOOPER On capital gains tax with Peps as long as you sort of from the date of the windfall could wrap it within the Pep within 40 days - there was no(talking over) - so you didn't pay the CGT and you could sort of get you know fantastic amounts - with not (talking over)

BAYER You could get tremendous yes - £20,000 worth of Norwich yes

DUGGLEBY That's right - Norwich Union was used for that - was one of the ones - so the answer is you can't do it unless you sell the windfall shares first.

SUSAN Right

DUGGLEBY Now then have you got a capital gain on the windfall shares because that will - could lend you - lead you - leave you with a tax bill?

SUSAN I don't think they would come up to that amount

DUGGLEBY £7,200?

SUSAN No no - they wouldn't

DUGGLEBY Okay well in that case Elisa there's nothing to stop you sending the shares certificate to the Isa operator?

BAYER No - yes - which windfall is it?

SUSAN Well there's between - the Halifax and the Woolwich

BAYER Right - now I wouldn't - be careful with the Woolwich - cos the Woolwich has just been - yes the Woolwich is gonna - has been bid for by Barclays, so you may not - I wouldn't do anything with that at the moment.

SUSAN Right

DUGGLEBY It's a bit of a waste of time because you'll - eventually the money will come through

BAYER Yes you'll get the money in any case for that

DUGGLEBY Is it - is it true - do you get some Barclays shares - is it a share and cash offer that one?

BAYER I haven't seen the terms yet - they've announced that they might do it but as far as I know they haven't issued anything at all.

DUGGLEBY Yeah so don't - don't do the Woolwich - just wait and see that work its way out - and the other one?

BAYER Halifax

SUSAN Halifax

DUGGLEBY Well I suppose it's a matter of whether it's a good long term investment - what do you say Graham?

HOOPER Well again the banking sector is down at the moment. I mean Halifax do have - have had for a long time oodles of cash and they are sort of one of the biggest sort of lenders in the UK, so if you're going to bring anything to bear you just have to - have to take a view on that particular share at the particular moment in time.

BAYER Yes but it's unlikely like the Woolwich to be taken over. It would do the taking, so if you were going to put it in your Isa you wouldn't make much of a gain.

DUGGLEBY No you wouldn't lock up the Halifax in an Isa

BAYER No no

DUGGLEBY Okay so the answer to that is Susan by all means take out an Isa - but

BAYER In favour of that bit yes - that bit

DUGGLEBY Don't don't - I - am I anticipating that you're trying to raise the money to fund the Isa from these shares - is that what - is?

SUSAN Yes - well no no - I believe in taking out an Isa - it's just using the shares I've already got in a more efficient way - really and truly -

DUGGLEBY But have you got the cash to fund the Isa?

SUSAN No it would mean selling shares to fund the Isa

DUGGLEBY Ah - well in that case then that's a slightly different question because I think we've implied that the Woolwich will give you some cash anyway - certainly - and the Halifax I think the consensus is it's not a particularly brilliant share

BAYER I'd sell the Halifax yes and use some of the money to start that way - so I'm in favour of the Isa - in favour of putting the money in - hold on to your Woolwich and sell your Halifax.

SUSAN Right - well thank you very much

DUGGLEBY But that said again the Isa provider will almost certainly will sell the Halifax shares for you probably at a cheaper commission than going and selling them through a broker or some other form of dealing service.

SUSAN So the Isa - the Isa would - they would take it at a cheaper commission?

DUGGLEBY Yeah well if you - if you - they'll normally take a share in like the Halifax because it's an easily - it's a big company, easily traded and they will probably sell it for you for a very nominal amount and they might if they're having a special offer as they sometimes do, even sell them commission free. So you then get the full proceeds invested in the Isa plan.

SUSAN Lovely - well thank you very much for your help

DUGGLEBY Ask first though before you do it.

SUSAN Sure - sure thing - thank you.

DUGGLEBY Right Patrick now in High Wycombe.

PATRICK Oh good afternoon

DUGGLEBY Good afternoon

PATRICK I'm trying to find a way to see if having recently become a widower and I've realised that the double whammy comes where you lose your wife's income and her income tax allowance, plus the fact you lose your married man's allowance, so I'm gonna go from being a non tax payer to becoming a tax payer albeit not until next April which is an interesting point - I think listeners would like to know that you actually retain your married man's allowance for the rest of that tax year - something I hadn't learned from listening to Money Box for as many years

DUGGLEBY We shall note it for our next programme.

PATRICK Right - well it was an interesting point and a small relief cos my wife did die in June so it might I had most of the year to ?..and I've been pondering on with profit income bonds, possibly chiefly because I've been led to believe that you can draw your income which you pay no tax on and in point of fact you won't pay tax on the outcome of any of it unless you become a higher tax payer.

DUGGLEBY Let's just clear this up - it's not tax free - it's tax paid. You're not avoiding tax - merely the tax - the basic rate tax is accounted for. Let's get Graham to have a comment on these with profit bonds cos I'm not sure it would be number one on your list?

HOOPER No I mean what with profit bonds do give you is security of capital and nominally as Vincent quite rightly says tax free income because as a base rate tax payer you won't pay any further tax on whatever income (talking over) - yes but you're not as Vincent again quite rightly says, you're not actually - it's not tax free because the company has to pay it themselves.

PATRICK Right - which would reduce your return maybe?

HOOPER That's right yeah - this with profit bonds also have to pay capital gains tax internally as well, so what you could look at would be other forms of investment - again if you're investing for - for the longer term it would be tax free and an Isa would obviously be high on the list.

DUGGLEBY Have you got an Isa Patrick?

PATRICK Yes indeed.

DUGGLEBY Right - so you're fully subscribed on.

PATRICK I'm gonna try to fully subscribe all Isas

DUGGLEBY All those - okay - well we'll take that as read then cos we've talked a bit about Isas and we'll just concentrate then on the - on the additional ways you can get tax efficient investment

HOOPER The - the - 2 or 3 other options would be unit trusts for example where there's no capital gains tax paid internally within the fund - it's levied on you as individuals - £7,200 a year. Again, basic rate tax would be payable by you if you're a basic rate tax payer or an investment trust, or you could go on to shares. Now you would need a slightly longer term because the thing - you lose by doing that which is very much more tax efficient for you I think is this security of the capital offered by a with profit income bond. But several of them have exit fees so if you did need to come out for whatever reason even though theoretically you've got security of capital, you may pay a charge on unit.

PATRICK That's right - the only exception - I'd like your opinion on that one is the CIS - they coyly say there could be a market adjustment to other shareholders, whereas most of the others say 5,4,3,2,1 over the next 5 years?

HOOPER Well you've obviously done your homework on it and the market value adjuster again is there to protect existing people but it can stop you getting your hands on your money when you - when you need it And to be fair they're often talked about but - but not very often implemented. So it's something..

PATRICK That's the impression they give - they say it would be an extreme.(talking over) whereas Prudential and others tend to say yes there will be a 5% or 4,3,2 depending on the number of years you've held it.

DUGGLEBY You've named - you've named one of the main providers - the Prudential - what else have we got available Graham that you favour?

HOOPER Standard Life - they've just recently launched a with profits bond and if you do invest in it you have to sign away your rights to any windfall for 3 years, but you know I mean you've got a (talking over)

DUGGLEBY Scottish Widows is that?

HOOPER Scottish Widows with profits bond - they've just got a special deal because of their demutualisation - take over by Lloyd's TSB so they're offering special terms on theirs with no fee when you go in. Legal & General have them. There's a lot of the big insurance - again Commercial Union, you know very financially strong organisation - they've got a good with profits bond. But don't only do the with profits bond. Look at the unit trusts and investment trusts for a more tax efficient.

PATRICK Yes you have kindly mentioned them and as I'm recording this myself upstairs I can have another longer think.

DUGGLEBY Yeah we actually - we can tell you - you don't need to do that if you've got a computer because we've got a website now. - it gives me an excuse.

PATRICK Which also colours what I really want to do with the money

DUGGLEBY It gives me an excuse Patrick to give a plug to our website - because this programme is going to be available all day and every day if you want to listen to it and what's more you can read a transcript in 2 or 3 days time on the web and it's on bbc.co.uk/moneybox and it's going to be there forever and ever so you know wonderful you can keep on listening to me whittering away, but I must stop you there cos I've got a couple more calls I want to take, one of which is Ted in Nottingham.

TED Good afternoon

DUGGLEBY Good afternoon

TED Some friends and I have just got share club off the ground and we're looking at people who want to deal through - we have actually already more or less set up an account with Charles Schwabb, though obviously we aren't necessarily tied indefinitely to any particular brokerage. We might move around depending on how we find the service. We have just recently noticed there was a company called Deal for Free who seem to deal for free.com and I really just wanted to know what the pitfalls are and what I should look out for?

DUGGLEBY Well Elisa Bayer you have to declare an interest that you work for Greg Middleton - but just first of all is there any special rules for investment clubs as far as brokers are concerned?

BAYER No I think as long as you know what you want that's fine and Charles Schwabb that's perfectly acceptable, but you said the word service. If you actually want to go and ask somebody a question or you want some advice and you don't want to just read it on the net, then it's going to cost you. The deal for nothing - there must be a catch somewhere and therefore I think you do need to be careful, whether it's the cost of the telephone call which is going to be more expensive, but I'll think you'll be fine.

TED Well I think we're dealing on the net

BAYER You're being on the net - then I don't know - but there must be do you know what I mean, there is something

DUGGLEBY Well it's what's called execution only essentially I mean it's no frills, execution only - you give

TED Well that's all we really need.

DUGGLEBY Right - well in that case you may not need the services of a broker at all and if you've got a computer by all means, but the warning of course Elisa is that these - these computer terminals sometimes they don't work do they?

BAYER Yeah and also the faster the market gets I mean that certainly happened at the beginning of the year, we found people coming back I'm glad to say to the traditional brokers- either they couldn't get through on the net lines or they couldn't get through to Schwabb.

DUGGLEBY And that happened on Friday too with some of the brokers

BAYER They have improved the lines but you need to be careful. If you want to do something on the minute you may not be able to get through.

DUGGLEBY Right - one final, very quick question from Jeannette in Lowestoft.

JEANETTE Hello it's Jeanette in Southwold actually - I just have £12,000 in premium bonds - I've looked at investing them in national savings for 5.9% for an 18 month period. Are there any better ways of investing over a short term while still enabling me to be able to get at my money if necessary?

DUGGLEBY Quick answer Graham?

HOOPER Well yes the sort of rates we talked - there's nothing wrong with national savings but they're absolutely copper bottomed and you do pay for that copper bottom because they're mapped by the government, so look around at the banks and building societies that we talked earlier on - the Northern Rocks, the Nationwides, the Abbey Nationals that sort of thing and you will get a better rate than 6%.

JEANETTE Lovely, thank you very much

DUGGLEBY Okay many thanks to Graham Hooper from Chase de Vere, Elisa Bayer from Greg Middleton - my guests this afternoon. If you'd like more information on the items we've been talking about there is a helpline on 08700 100 400 And as I said a website - bbc.co.uk/moneybox where transcripts will be available in 2 or 3 days time. Don't forget to join Paul Lewis for MONEY BOX on Saturday at noon and if you can't manage that the good news is that it's now repeated at 9.00 o'clock on Sunday evenings. I'll be back same time next Monday afternoon to take more of your calls on MONEY BOX LIVE.

BACK ANNO That was Vincent Duggleby and the producer was Stephen Chilcott.