How I advised my mother-in-law on her search for income

As I relaxed back in the armchair with my cup of tea, my mother-in-law put down her book and fixed me with a beady eye.

“Where can I get some income from nowadays?” she quizzed. I knew that my standard line – “sorry, I cannot give financial advice” – would not work in this situation. I took a long gulp, and set about establishing the ground rules.

Only a few questions were needed: the result of some share sales and dividend payments meant that they had a tidy sum sitting in a high street bank account gaining a full 0.25% interest rate a year – and quite possibly she was paying tax on that as well as the words R85 meant nothing to her at all.

First things first, I advised, what do you need the money for, are there any deadlines? No, it seemed that my father-in-law wanted enough set aside for any unexpected visits to hospital, or more likely emergency repairs on the old MG sitting in the garage. Apart from that, income was the order of the day.

The question of risk was a more difficult one to address. On the one hand they wanted a considerable amount of security for their hard earned cash, on the other hand – by the time we had finished off the second piece of cake – she did accept that risk and reward went hand-in-hand. There was every reason to look for more income to support their lifestyle, but there were very few investments which could give a good return with little risk at all.

“Let’s start with ISAs, of course,” I advised. After all, they are safe, they are tax free and by shopping around there are some decent returns. That looked a good place to park their need for immediate cash. We moved onto the thorny question of ‘bonds’. The very name should be outlawed, I decided, after several minutes trying to explain the difference between long term bank deposits, a National Savings bond, an insurance company’s investment bond, a corporate bond and government debt.