TRY GOING HALVES OVER DINNER
I love a younger woman who works for a client and she is in love with me and wants us to marry. But that means breaking up my marriage after 23 years and possibly alienating my children. The financial implications would also be devastating. My wife does not work and loves life as a corporate wife. We had a ghastly showdown during which she made it clear that if it comes to divorce, she would go for the house, worth at least £700,000, and a fair share of my pension, due in nine years and currently valued at £85,000 a year, in what she called a 'clean-break settlement'. Can she really take so much now?
The cost of an acrimonious divorce cannot be measured in terms of money alone. Continued cordial relations with your future ex-wife and your children are valuable too. As both women sound as if they mean business, you had better cut a deal that satisfies both or you will all be losers. The Pension Sharing Bill 1998 is not yet law. Its rules, delayed until 2001, will govern splitting of pension fund assets on divorce so that the member retains some of those benefits in his name and the divorcing spouse receives either a transfer value in respect of her rights or becomes a member of the same scheme with a distinct share in the pension rights.
But this is only an option. There will be no compulsory 50-50 split.
What is new is that pension funds will be treated as part of the matrimonial property and be offset against other assets, such as the matrimonial home, when calculating a clean-break settlement.
So make dinner dates, first with your future wife, and then with your future ex. Tell the first you plan to make a generous financial offer - say, half of everything - to the second, but that would mean less for her and any children you may have together. If she agrees, go ahead with the second dinner and negotiate with your future ex and you might deal for less than half. But if your future wife does not buy this plan, save the cost of the second dinner and count the cost of a bitter break-up.
Then decide what to do next.
COOL CASH OR A CLASSIC RIDE
I have been offered a £25,000 company car or £8,000 cash allowance. I really fancy a new Mercedes C 200 Classic with a 1998cc engine for £22,240 but which is the better deal?
Assuming you do not need the car for work, I advise you to forget the feel-good factor of driving a flash new car on weekends. Take the money.
Tax-wise, you will be on higher rate and it is smarter to take the extra wages and buy your own car.
The Mercedes will cost you £3,500 in tax per year, even without the costs of running and servicing it. The cash allowance will cost you £3,200 in tax and you keep the balance of £4,800. But if a Mercedes is going to enhance your life, go for it. You only live once. Pay the max in tax and call it an investment in lifestyle.
TIME TO SHOP AGAIN FOR TRAVEL COVER
I have read that holiday discounts tied to travel insurance are to be banned. We are going sailing in the Greek islands in June. Where should we go for travel insurance?
Travel agents have taken us for a ride in making holiday discounts contingent on us signing up for their travel insurance - which in turn has stopped us from shopping around to get a better deal. For value for money, I would go to the Post Office, buy from Boots or shop around the specialist travel insurers. Family cover, if that suits your circumstances, is usually the best value.
THE SMART MONEY IS ON BLUE CHIPS
My wife is nagging me to surrender our 25-year endowment, which matures in 2009, to pay off a £60,000 mortgage. My brother and I have also inherited £78,000 each from my father, and my brother wants to lend me his so I can put £150,000-odd into shares for my retirement. I am 54.
I don't want charity from my brother and, anyway, shares are too high now, so I say we put the cash on deposit and wait. My wife and I are having blazing rows about it. It's our last chance to build up serious money.
What do you think?
Leave both your endowment and mortgage well alone. In 11 years' time, your endowment will hopefully pay off your mortgage and leave you debt-free.
Invest your £78,000 in blue-chip shares now and stay locked in to grow your capital and income for retirement. Even an average compounded total return of 10% a year - that is, dividends re-invested plus share price rise - will double your money in just over seven years.
As for market timing, Einstein went to heaven and had to share lodgings with three others. 'What is your IQ?' he asked the first. 'It is 140, Mr Einstein,' he replied. 'Good, we can discuss my theory of relativity,' said Einstein. 'And what about yours?' he asked the second. 'It's only 120, Mr Einstein,' he said. 'Fine, we'll talk about new movies.' When he asked the third, he said: 'Mine is only 80.' 'So where is the stock market going?' asked the learned gentleman.
Only schmucks forecast the market. Buy directly into quality growth shares, or buy them through unit trusts. Hold them for the long term.
Stella Shamoon writes on private investment for The Times.
Please address your problems to her at: Management Today, 174 Hammersmith Road, London W67JP.
Or e-mail: firstname.lastname@example.org Your Money Matters is not intended as a substitute for professional advice.
Readers are advised to contact an appropriate adviser. No legal responsibility can be accepted by Management Today. No correspondence can be entered into.