Chapter Seven

CAPITAL

If you fancy your wealth in a sizeable chunk, as capital, your best hopes are to inherit it or receive it as a gift or as compensation. An outright windfall surprises most people at least once in their lifetime.  If you want funds for a specific purpose, you can try to borrow the money.

You can build up capital through savings, as we shall see in Chapter 10, or invest your capital to grow. We investigate this in Chapter 12. But you cannot really earn capital, even though people who looked after an elderly relative for years and were remembered in his will might feel that they deserved it.

When you receive wages from a job or income from an asset (such as rent from your spare lock-up garage) as soon as you invest the cash, it becomes capital. Maybe you put it on deposit in the bank. The interest you earn from it is income.

If you leave this new interest on deposit so that it earns its own interest, it too becomes capital. Income can transform itself into capital, but capital can never turn back into income. An apple (income) contains pips that can start a new tree (capital), but a tree can never shrivel back to an apple. It is a funny old system, but this remains the basis of all accounting, banking, finance and taxation everywhere in the world - if only because no one can agree on a better one.

INHERITANCE

Inheritance is the most common method of self-enrichment. Even in the U.S.A., that land of opportunity and the self-made man and woman, most millionaires are only millionaires because they were born that way. It was Pa or Grandpappy who had the brains or did the hard graft.

Most people inherit fairly late in life and from their parents. As people now live longer, children who a generation ago might have inherited in their forties now don't inherit until their fifties or sixties. By this time, their hard-up years of child-rearing are a vague memory, and most of their plans and dreams have been either realised or abandoned. The wealth is not as useful to them as it might have been earlier.

Most married women can expect to inherit from their husbands. (On average, wives are younger than their husbands and live longer anyway.) There are wise and foolish ways for women to manage such a windfall.

Farmer Roberts, one of my clients, stinted and scrimped all his life. He boasted he never wore underwear; he did not believe in it. His neighbours said that if he rubbed a hole through one wellington boot after ten years' use, he would refuse to buy a new pair. No, he would rather wear a gumboot saved from a previous pair, on the wrong foot if necessary, until that wore out too.

Farmer Roberts  showed me around his house once. Every piece of furniture dated from 1910. This was when his father had bought the house and furnished it for him. He had bought nothing since.

In his eighties, Farmer Roberts sold off several fields. I helped him to make, keep and invest many tens of thousands of pounds. Mrs Roberts looked on smiling, never offering a suggestion of her own.

When he went into hospital for his first and last visit, complete with his first-ever pyjamas, the nurses were amazed to discover that Farmer Roberts had no medical card. He had never seen a doctor in his life! He died childless, and his wife was suddenly transformed from a life of cheerful meanness to being a very wealthy widow in her sixties.

She took it all in her stride. Her solicitor and I arranged everything to provide her with ample cash day to day, far more than I earned. She built the modern house of her dreams nearby and invited her sister to keep her company. Together, they enjoyed frequent holidays, bought the best of everything and generally made up for lost time.

Mrs Roberts still found time to treat the entire old folks' club to a super tea and to support her favourite charities. She arranged that after her death as much as possible would go to the people and charities of her choice. She did not lose a single friend.

Mrs Coleman, by contrast, lost her husband suddenly in her forties. He had been a builder, moderately successful so she supposed, and she a shy little housewife. Imagine her surprise when he left her 150 building plots, each worth tens of thousands. Suddenly she found people's attitude to her transformed. Men who had never glanced in her direction before started to tell her how pretty she was. Women began to ask her opinion or advice. The bank manager invited her to dinner. In no time, she found she had attracted a live-in boyfriend.

Mrs Coleman had two daughters, both happily married with toddlers. Idolizing her grandchildren, she thought it might be fun to buy a holiday flat in Spain. Then the family could enjoy it together. 'Why settle for a flat?' the estate agent suggested. 'Why not buy the whole floor?' So she did.

When the family came on a long holiday, Mrs Coleman kept a tight grip on the purse-strings. She decided how every penny should be spent. No one could even take a taxi without her insisting she must pay for it, and everyone had to see her pay. Her sons-in-law started to resent it. They grew short with her daughters. Only in the bar, downing cheap brandy, could they swap complaints and feel free of Mother-in-law.

Mrs Coleman found it wearing, living with noisy toddlers, despite her affection for them. She meddled in their upbringing; well, everyone else was asking her advice these days. At the same time, she could not understand why her family despised her boyfriend. He had no job, he never opened his mouth and spent his life cadging.

Family rows grew worse and worse. People began counting the days until they could go home. The sons-in-law hinted that next time they would prefer to come without Granny, which hurt her very much.

The Spanish investments did not yield much income, but Mrs Coleman was not bothered for the moment. This was the last thing on her mind after she answered the doorbell to a stranger one morning. The woman clutched a baby and asked for her husband back. Mrs Coleman humiliated and ashamed, turfed out her boyfriend on the spot.

Poor Mrs Coleman. She has not exhausted her inheritance yet, but it is only a matter of time. She lives on her own again, with her family alienated. Why? Basically because she could not cope with the sudden influx of money.

If her husband had had more foresight, he would not have expected her to. He should have set up a trust with skilled trustees to help her. Looking back, it would have been better to leave some money, or building plots, directly to his daughters too. It might have sweetened the sons-in-law. It would certainly have sheltered family money from the taxman's clutches.

Goodness knows how much the family would lose in inheritance tax should Mrs Coleman die. Of course, she does not want to think about such a thing. (I will go into this in more detail in Chapter 15.)

And the moral? We are never too old to enjoy a legacy. Whether it turns into a blessing or a curse depends on our attitude and on how prepared we are beforehand.

GIFTS

'Wherever did you get the money to buy your house?' the tax inspector asked the pleasant young man without a penny in the world.

'Mike Brown gave it to me,' came the ready reply.

'A relative?'

'No.'

'But you must pay it back?'

'No. It was a gift.'

'Er, why?'

'We both attend the same church.'

The official spluttered. This young man expected him to swallow that! A tax inspector spends his day sorting through the truth, fibs, distortions and downright whoppers. He was inclined to file this tale among the whoppers. So he showed the fellow the door and made enquiries in every direction he could think of about the church. When the results came in, he hummed and he hawed. He asked his colleagues and his superiors. He slept on it. In the end he had to concede. The young churchgoer had told the truth.

By all accounts, this particular community of Christians really did help each other financially. One member would cheerfully give a large sum to another in need, with no strings at all attached.

The young man explained that, later on, when his family's needs grew less, he would do the same for someone else. Perhaps he would take out a mortgage and give the money to someone else to buy a house. Perhaps he would move out of his present home, so that a larger family could occupy it. There was nothing in writing. It was all a matter of trust. Such things do happen, even today.

For most people, gifts come from members of their family. Maybe they start off as loans, and after a while the lender says to forget it. People adopt this approach to help youngsters feel more independent.

Gifts in the hand are one thing, but beware of gifts with strings attached. They may not be as generous as they appear, even if the strings are of your own making.

'You can live in this house rent-free all your life. After I die I will leave it to you,' promised my great-uncle George to his nephew Bert. Bert and his bride Florrie were delighted. Few newlyweds then were so fortunate, especially as Uncle George lived elsewhere. They moved in at once. George kept his promise, but he did not die until he was 97 and Bert and Florrie were in their seventies.

The couple lived in his house for fifty years. During all that time, they never changed a thing and hardly bought a thing. They never even put a coat of paint on the front door. They lived in extreme discomfort - believe it or not, no heating even in January, no inside water tap, let alone toilet or bath - while their bank balance grew and swelled.

Why? Because the house was not theirs. They were terrified that if Uncle George changed his mind, their efforts would be wasted. Their uncle's very generosity kept them chained for life, because the one thing he did not give them was security of tenure, and this devalued what he did give them.

Once upon a time, lifetime gifts did not suffer tax, but gifts on death (legacies in a will) did. So wealthy people naturally gave everything away before they died. Great-Grandpapa would sign away his possessions with his final gasp.

A Labour government introduced capital transfer tax to tax gifts whenever they took place. Conservative governments repeatedly weakened the rules and finally removed all taxes on lifetime gifts. Nowadays, the only tax on gifts is called Inheritance Tax. It charges gifts made by an individual in the seven years before his or her death, and on the value of assets when he or she dies. I look at this again in Chapter 15.

In the days when Capital Transfer Tax was still strong, one of my colleagues saved a client £100,000 (in current terms £500,000) by persuading her to give her son the farm he already ran. This was the difference between the tax she would pay on the gift and the tax she would have paid if she had left him the farm in her will.

Mrs Leigh, the mother, started off reluctant but conceded,

'He might just as well take it now as when I'm gone.' So if you are trying to persuade an aged relative to give you something now, the tax saving is a good angle. Under today's rules, Mrs Leigh would have saved even more, provided she survived three years, preferably seven.

Yet she was right to hesitate. She recognised what a twit her son was. In three years he ran through the £400,000 the farm was worth and came back to ask for more.

His stupidity even hit the local newspaper when he embarked on a little illegal stubble-burning, let it flare out of hand and started a blaze. He seized the nearest thing to put it out - a cylinder of spray. The chemicals inside produced dioxin gas. Even when eleven people, mostly fire-fighters and his own labourers, had been rushed to hospital, he dismissed the scene as a fuss about nothing.

Mother-in-law and daughter-in-law did not hit it off, and this was another reason why Mrs Leigh senior had appeared reluctant to save her family a fortune. So, if you are seeking a gift, remember that the donor may be quite willing to give to you but reluctant to see your husband/boyfriend/associate with their paws on the money.

The last I heard, Mrs Leigh was still shelling out of her bottomless hoard. By now it was a habit; her old reluctance had yielded to resignation.

Mrs Leigh's daughter-in-law, her patience at an end, turned her back on these endless streams of new money, and sued for divorce. Luckily, her own mother sends similar top-ups from her Channel Island tax haven to keep daughter and grandchildren smiling.

WINDFALLS

Some people are born great, some achieve greatness and some have greatness thrust upon them. This saying also applies to money. Some people, without raising a finger to earn it, may suddenly find themselves rich.

Windfalls appear under every guise: a pools win, a lucky bet, a lottery ticket. Maybe you will strike lucky as a contestant on a quiz show, or write the winning slogan in a competition.

An out-of-the-blue inheritance may arrive from a relative you never knew you had. You may inherit a vast legacy like the one Mrs Coleman received, when she only expected a small sum. Even a lump-sum divorce settlement (see Chapter 14) counts. Hundreds of people receive windfalls they would rather not have - redundancy payments because their employer has cut back on staff or gone out of business.

Far more common than pools winners are people whose lump sum arises as compensation paid under an insurance policy. Suppose you were hurt in a car crash, for instance, made an insurance claim and received compensation for your injuries.

The courts too can order a lump sum to be paid to a victim. Courts decide when people have been harmed, either bodily or mentally, or their reputations damaged. They make the people responsible pay compensation.

You have to sue, of course. But suppose you are one of dozens injured in a train derailment. All the victims band together, the courts hear one test case, and your lawyers settle the amount due to you out of court. Don't expect instant riches and start spending - you may wait years, even a decade. Above all, unless you are really desperate, never borrow on the strength of the compensation you may receive one day.

I heard of a female barrister, the friend of a friend. She was walking to court, immaculately turned out in gown and wig, briefcase under one arm when she had to pass a road-tarring machine. As she stepped around it, the apparatus went haywire. It covered her from head to foot in hot tar. The local council coughed up her compensation at once and handsomely.

Then again, disaster funds are often set up for the victims of a public tragedy. The trustees have wide discretion what they pay out, when and to whom.

Sometimes ordinary people get caught up in events and find that the newspapers will offer a fortune for the photo they snapped on the scene, the video they just happened to be taking, their account of what happened. They do not even need to put pen to paper, because usually reporters do the actual writing for them.

There are as many types of windfall as there are stars in the sky, and new ones are appearing all the time. Take the man who was simply digging his garden. He forked out a weed and was about to toss it away. Then he looked again. It was clover. But there was something odd. Then he realised: every stem had four leaves. So he potted it up and watched. Sure enough, the plant only produced four-leaved clovers. Soon he developed a flourishing business selling lucky four-leafed clovers by post. Tax-free. The Inland Revenue admitted that the freak plant was a pure windfall.

How often have we envied the woman who discovered the ugly old vase her aunt gave her was genuine Chinese porcelain and worth a fortune? Of the man who nearly threw a hideous old painting on the bonfire, only to notice a tiny scrawled signature in one corner which turned it into a priceless old master? Such stories cheer us all and send everyone rushing hopefully to the attic. They do happen - as sudden and rewarding as a lawnful of mushrooms.

We all know how planning permission inflates the value of a plot of land. When my local council announced a development plan for one village nearby, several of my farmer clients found themselves millionaires overnight. Their fields rocketed in value from £2,000 an acre to £70,000 an acre. The farmers were besieged with offers from building firms that wanted to construct housing estates.

Can you predict windfalls? No. Far-sighted people buy land on the outskirts of towns or which might one day provide vital access to others. Then they bide their time and hope. The biggest gain I ever came across was made by a canny farmer who bought a field for £100 in 1945 and sold it for £100,000 in 1975 when a motorway was built.

The art of managing a windfall is to recognise it for what it is: a one-off. Unlike a pop group I dealt with - they achieved one monster worldwide hit. (You would recognise the name.) They made it with the cheap guitars and drum kit they had always used. But their new agent persuaded them that they needed brand-new state-of-the-art equipment to stay at the top.

They blew all their earnings on it, including tens of thousands for a synthesizer whose banks of switches would have befuddled an airline pilot.  It was so novel, they had to have it flown in from the USA. The group threw away the simple guitars that had backed the great hit. And guess what? They never managed another hit at all. Despite their huge earnings, which dribbled in for years, the group fell deeply into debt. Their agent soon pocketed his fees and the kickbacks from the instrument sellers. He left them to sort themselves out and went off in search of other mugs.

So - windfalls are wonderful. But don't expect them to keep on arriving. Even Aladdin only found one magic lamp.

Another of my clients was offered a very odd windfall but refused to accept it. Why? Because he was too greedy! He was expecting a tax bill for £30,000. When the bill came, it demanded £3,000. The bill was handwritten and legal; quite exceptionally, the clerk had made a mistake which would never be rectified. So what did my client do? Pay up and shut up you might think. Not likely.

'I'm not paying those leeches a penny yet,' he growled, although he admitted he owed the full £30,000. So he complained. The affair was reviewed, the mistake was noticed as it was certain to be, and he received his bill for the full £30,000. Then he was satisfied.

BORROWING AND INTEREST

Most of us need to borrow at one time or another. It should always be for a specific purpose, such as to start a business or to buy a home. Never borrow just to keep going until next payday. If you are that bad a manager (or that desperately poor) go to the Citizen's Advice Bureau. www.adviceguide.org.uk Ask for help on budgeting and ask if there are any welfare benefits you should be claiming. For example, a Budgetting Loan. Contact www.dwp.gov.uk/

If you have money but somehow seem to lurch from one crisis to another, go to your bank. You might find its budget account is just what you need. Together, you work out which big bills are likely to fall due when. You may receive a special chequebook to pay them; or alternatively the bank may allow you to pay out more than you have deposited. The bank then takes its money, and interest on the loan, from your regular deposits.

There are many sources of loans, but even today, the most common is the family. This is the only form of borrowing where you are not likely to pay interest. Organisations like banks and finance houses exist to make  a profit. They earn it out of the interest they charge. It must always be higher than the interest they pay you on your deposit accounts. This is how they cover their expenses and pay for their plushy offices and their television advertising.

Why must you pay interest on loans, and how does it work?

Let me offer you a choice. Which would you prefer: £100 in your pocket ready to spend or £100 coming in a year's time? There is no possible reason to choose to wait, even ignoring inflation. In a year's time someone else may have bought what you wanted or you may not be around to enjoy it. Besides, you will have had to bite your nails while you wait.

Interest is the reward you receive for not enjoying your own money now. Equally, when you borrow, interest is the price you pay for enjoying someone else's money and forcing them to wait.

Naturally, whenever you borrow, you want to do it as cheaply as possible. The main cost of borrowing is interest, so you aim to minimize the interest you must pay. For this you need to know what the real interest rate is.

Suppose you want to borrow £100 for a year, and the interest rate quoted is 10 per cent per annum. (Per cent means 'out of a hundred' and is often shown by the sign %. Percentages are explained in Chapter 20. Per annum, or p.a., just means a year.) At the end of the year, you repay the original £100 (called the principal) plus £10 interest. Total £110.

But suppose you agree to repay the loan and interest regularly through the year, say £9.16 a month (£9.16  x 12 instalments = £110). Then, although the interest rate is apparently 10 per cent per annum, in fact it is far higher.

Why? Well after month 1, you only owe £91.67 because you have repaid the first instalment: ££91.67 is the £100 you borrowed less £8.33 of the £9.16 you paid. The other 83p is one twelfth of the £10 interest you are paying.

By month 11, you owe virtually nothing. But the 10 per cent was calculated as though you owed the full £100 for a full year. If you work out how much interest you pay on what you actually owe, the interest swells to a horrific 18.46 per cent.

To avoid this misunderstanding, you want the interest calculated on the reducing balance - that is, on £100 for one month, on £91.67 for the second month, and so on. This way, you only pay interest on the money you really owe. So there is a vast difference between a straight 10 per cent and 10 per cent on a reducing balance.

If you borrow £100 at 10 per cent on a reducing balance over a year, you actually pay £5.42 interest instead of £10. £5.42 over a year on £100 is effectively 5.42 per cent.

If you think this is impossibly muddly, so does the government. That is why they introduced the AER and APR to help you. I explain these in Chapters 11 and 12.

All sorts of organizations will fall over each other to lend you money. They will eagerly offer you a credit card or a charge card. Many shops offer an account card which is a credit card that only covers goods in their own shop. (These are all different from a bank card or banker's card. This only guarantees that any cheque you write will not bounce. So it protects the shopkeeper.) Then there are debit or Switch cards which simply transfer money from your bank account to that of the person from whom you are buying.

Other organizations entice you with hire purchase or lease purchase. I explain these in Chapter 11.)

All lenders demand proof that you will be able to repay them. You fill in their forms, giving details of your income and outgoings. Sometimes, they also want extra security. The hire purchase company, for instance, continues to own the car you have bought, and you cannot legally sell it until you have repaid the loan.

Sometimes the security takes the form of a signature by a guarantor. This person volunteers to pay up if the borrower cannot. In the past, female borrowers often had to supply a male guarantor, simply because they were female.

I knew one single woman, a long-standing civil servant in her late thirties, who had to persuade a distant male cousin to sign as guarantor so that she could buy a house. And she had to pay 15 per cent interest when the going rate was 6 per cent. Not any more: today she would be recognised as a valuable customer in her own right. She might even act as a guarantor herself. Many women do, like the mother of a teenage son buying a motorbike but too young to sign the hire-purchase agreement.

Where organizations don't take up references or demand security as a guarantee, or promise minimal paperwork and few questions to answer, you should beware. Some newspapers carry small advertisements offering to lend money to anyone, even to pay off other debts, even for people with no  job and no money. Their interest rates will be crippling - 60 per cent is not unknown.

Besides, because they are lending to the riskiest people, the men who come to collect the debts may not be too gentle. If you want to entangle yourself to your dying day, this is the way to do it.

I have said enough about borrowing for you to see why it needs Chapter 11 to itself.

OTHER WAYS TO GET CAPITAL

There is one more way to raise capital and that is to steal it. This is not a way which would occur to many women, but you would be amazed how many men consider it, and even plan it.

Are women more honest than men? In my opinion, yes. In eleven years dealing with tax evasion, sometimes on a vast scale, I only came across one big-time female villain. I will tell you her story later.

And the proof of all this female honesty? For a start, the prisons are full of men.

'You know why that is,' scoffed one woman-hater I know. 'They ended up behind bars because they broke the law trying to please some woman.'

Most female thieves fall into the category of Marlene, who worked for the Inland Revenue. Her job was to send out cheques to repay people who had overpaid their tax. She thought it the easiest thing in the world to open a few files for people who did not exist. She would open bank accounts in their names, post the cheques to her own address and pocket the money. Easy.

It was so easy that many people had dreamed it up before. Marlene knew that there would be regular Civil Service audits to check for this sort of theft. She also knew that her employer would be certain to prosecute her. She shrugged her shoulders.

The auditors knew just what to look for. Marlene ended up in prison. To crown it all, the sums concerned were paltry.

At quite the other end of the criminal scale you find the skilled male who thinks big. After a blameless career, he wants a monstrous fortune from one perfect crime. He commits it during his everyday work, using the expertise he has acquired. It may involve little more than tapping a few entries into a computer terminal. With some computer frauds, the criminal even knows he could be traced. But he covers his tracks so thoroughly that he knows it will cost his employers too much to trace through to find out whodunnit.

Often too, unfair though it may seem, employers are too embarrassed to bring charges, and the criminal goes scot-free. Why? Perhaps his crime was so large-scale that the publicity of a trial would show up a yawning chasm in the firm's security. Shareholders would want to know why. Alternatively, his scheme might have been so profitable that the employers adopt it and continue to operate it legally.

Successful criminals do their homework, sometimes for years. They know exactly what detection they are up againstand even what their chances are of being caught. They know how well a firm's records are checked. Besides, big crime often demands a large outlay of capital to set it up - often from the proceeds of earlier crimes. Marlene never stood a chance.

Female criminals are rare. Much more common is the woman who, if she has any sense at all, must realize that her husband or lover or employer cannot have come by his money honestly. She looks the other way, perhaps living a life of fear and dreading every knock on the door.

Take Jill. She thought the world of her boss - he was always so pleasant towards her and well dressed. But she also thought that all businesses must involve secrecy, lies and angry customers. She loyally held the fort during his sudden dashes overseas, followed by his sly returns. How often did she phone me promising that her boss would pay our four-figure bill if I would return all his papers first? There was plenty of evidence of skulduggery. Her boss even ordered all income to be paid directly to his lawyer. This way, he did not possess as much as a bank account in his own name. Trusting Jill stuck to her post. Finally, her boss decamped from his prestige offices to hide behind her name in her flat. She thought he was just going through a bad patch and needed her support. And all the time she was running the risk of standing in the dock beside him as an accessory.

Most women realize how much easier it is to be honest - easier on the nerves, the tongue and the memory. They still need to be able to recognise the signs of dishonesty.

One last thought before we leave the subject of how to get your capital. A lot of people wave goodbye to their own money because they cannot be bothered to claim it.

Does anyone owe you money now? What are you doing about it? Sometimes a simple letter from you or your solicitor can work wonders. People genuinely do forget. You have to pay for a solicitor to write. Don't ask them unless you are owed over £1,000. Then tell your solicitor the maximum you are prepared to pay them.

When I sold a boat back in the 70s, but the agent hung on to the money, I asked my solicitor what he could do for £30. The answer was 'Quite a lot.' Just one letter from him made the agent cough up, and the selling price was higher than I had expected.

Has someone borrowed something valuable and forgotten to return it? Are you now thinking of paying to replace it rather than asking for it back?

When did you last check your Premium Bond numbers? Millions of pounds wait to be claimed, mainly because winners have forgotten to register their new address. Do you always claim refunds that are due to you - for instance, when you sell your car and you have just paid for a year's insurance?

Are you claiming from all the various pension schemes or savings schemes you may have paid into, then lost track of, over the years?

It is amazing how much guaranteed, tax-free money people are willing to turn their backs on for the price of a postage stamp and two minutes to write a letter. (I still maintain a letter rather than an email. They get more attention.) Remember too, every day you delay, not only is your money worth less but you are also losing interest on it.

'I've won a hundred quid,' marvelled the man in the pub. He studied the card he had just scratched. 'Says here you have to go and claim it. Can't be bothered. Anyone buy it off me?'

'Ninety quid,' his neighbour offered, opening his wallet.

'Done. Here you are. Like a drink?'

At  the other end of the social scale was the lady, a friend of my client, whose aunt died. The solicitor told her she had been left a mysterious legacy - seventy packing cases in store with Harrods. She could not even be bothered to look.

It was my client, bursting with curiosity, who persuaded her to open the cases and discover what she now possessed. The contents were revealed: beautiful antique marble statues from Italy, each one a work of art in its own right and highly valuable. The owner would have paid Harrods just to store them for years.

Then again, I have known people pay for years into a health insurance policy. Yet when they fell genuinely ill, they refused to claim. Why? They somehow worried that if they did, they would 'get into trouble'. Yet that was precisely what they had been paying for.

Marion contracted cancer in her early thirties. By fluke, she looked at her mortgage protection insurance policy. This promised a large sum in just such circumstances. The insurance company paid out. The doctors cured Marion completely. With no mortgage, Marion, her husband and family could afford a complete change of life. They are now my neighbours in France! Would it have occurred to you to look at your policies?

When you break a mirror, a sink, a loo, a window, spill red wine on your carpet or a pipe leaks, do you check your household insurance policy to see whether you can claim? If there is a no-claims bonus to lose, it is worth your while to do so?

If, heaven forbid, your house burns down, do you have a record of all you possess, in order to claim in full? People often receive far less than they should, simply because they rely on their memory. If you are reading this at home now, close your eyes ad mentally list everything in the room. Now open them and look again. How much did you forget?

Sometimes the quickest way to record everything is to hire a video camera (or use your digital) and film every room and the contents of every drawer. Place the film in the bank for safe keeping (or save the pictures onto a cd or dvd kept somewhere out of the house) and update it every year or two.

Once you have the capital, the choice is yours. You are free as the wind. You can spend it, save it, invest it or do a little bit of each. Whatever you plan to do with it, the first essential is to keep it. That is what the next chapter is about.

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