Reserves are longer term-savings - for retirement, for your children's future or for a major project some years ahead. You should not embark on this until you have satisfied yourself that you have adequately covered the first three priorities. You must be prepared to keep on saving for several years and, in some cases, accept some ups and downs in market values to get the best return over the longer term.
The types of investment you will be looking at are: life assurance policies of the savings type, endowment or unit linked- For most of these you have to save for at least ten years. Don't forget to check on surrender values in case you need the money before maturity - it can be expensive to surrender in the early years.
Then there are unit trusts, which have no fixed term, but the longer you save, the better; and shares and investment trust shares- You will need advice about all these and you must remember that their values may go down as well as up with market values.
Finally, there are pensions- As well as the government schemes and any scheme you may have at work, there are a number of other schemes through which you can benefit. If you are self-employed you should look particularly carefully at this way of saving.
Recent legislation has changed the picture - We shall now look at your starting position with regard to money under four headings:
� Your need for basic protection
� Your housing requirements
� Starting to plan for retirement and old age
� Savings and wealth creation.
Take a look at this simple set of questions to find out where you stand. The letters direct you to the appropriate points in the text below.