Q I have read various articles about Ethical investments which I am keen on, but I am nervous of the stock markets.

At the moment I feel I have a bit too much in the building society and the rates aren't that attractive for a taxpayer and I am looking for a better return. Should I take the risk now or wait until later?

A When you invest in the stock market, be it through direct shares, unit trusts, investment trusts, or OEICS etc, then you should be taking a long-term view.

If you are worried about the ups and downs, perhaps you ought to be looking at less volatile types of investment.

One such investment could be a Corporate Bond fund, which, if included in a PEP, should provide an attractive tax efficient return with the possibility of some capital growth in addition.

One of the country's leading institutions is currently launching a fund which only invests in corporate bonds issued by companies that would be approved by a normal ethical fund. The difference being that instead of the fund manager buying shares in the "green" companies, they are buying the bonds. This means that you can invest ethically in a lower risk tax free investment which may suit your needs. I suggest you speak to an independent financial adviser to make sure that this is the right area for you to consider.

For more information on Ethical Corporate Bond PEPs readers can call 01484 860123.

Q I am 26 and work for a small company that doesn't have a pension scheme. My salary is just over £18,000 a year. I am thinking about starting a personal pension, as I would like to retire at 55. What sort of contributions should I be paying in?

A As much as you can afford is the straightforward answer. If you want to retire at 55, you are going to have to contribute quite substantial amounts in order to have built up sufficient funds to generate the required income when you stop work. The maximum that the Inland Revenue allow at your age is 17.5 percent of earnings, in your case this is £2,425.50 a year net of basic rate tax. This may seem a very large amount and most people cannot afford to put aside such levels for their retirement because you also need money now!

If you are serious about planning to retire early, then it is vital to get a forecast done, showing you the costs of providing say 50 per cent of your income as pension. These can be obtained free from an independent financial adviser and need to be regularly reviewed in order to keep you on course for an adequate pension in retirement. The main thing is to tailor your pension plan contributions to affordability and keep topping the level up when your salary increases. The earlier you start the better as the money has longer to grow and a delay of just five years can often mean a large reduction in your overall pension.

For a free factsheet on Personal Pension plans ring 01484 860123.

Q I have a number of private pension plans that mature in June when I am 65. They have all offered me various types of pension and I can have some of it as cash. They also mention, something called an "Open market option". Could you explain what this is?

A An "Open Market Option" means that instead of buying the pension or "annuity" from the same company, you can take the cash values of all the various companies and shop around to find the company who will give you the best pension. As all companies have differing rates, if you have more than one company's plan, then they can't all have the best rate!

Q I have been looking around for the best TESSA rates as my original one matures next month. The rate I have been offered is 7.0 per cent. Are there any better returns on offer?

A If you are looking at a variable rate, then the best rate currently available is 8 per cent. Wth interest rates possibly due to fall over the next few years, you may like to consider a fixed rate so that you know exactly what returns you will get over the five year period.

Q I have a portfolio of unit trusts where any income is re-invested in the fund. It looks as though I will be paying higher rate tax next year and want to know whether this has any implications for my investments.

A The fact that you have elected to receive the income generated in the form of extra units rather than cash makes no difference in the eyes of the revenue and you will have to pay the extra tax. You should have received notification of the value of the extra units from the investment managers and this must be included in your tax return.

Q I am 47, and as I didn't work when I was looking after my children when they were young, I am worried about what pension I will get when I retire. I work part-time at the moment.

A The state makes provision for "mums", in that you should receive full credit for the years you were bringing the children up regarding the basic state old age pension. You should find out what benefits you will be entitled to, and I am sending you the DSS form which will tell you this. You should also think about making your own provisions as the benefits from the state are likely to get less over future years. You should seek independent advice as they can assess your own circumstances and see what can be done. Other readers who want to find out what the state will pay them can get a form by ringing 01484 860123.

For more information on any of the above topics call 01484 860123.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.