An Irish Times guide to the world of personal finance

Bank drafts

I sent a bank draft to an organisation in Scotland via post. They say they haven't received it. If I went to the bank where I obtained the bank draft, could they instigate a check to see if this draft has been cashed by someone else? I fear the letter may have been intercepted.

Mr J.C., e-mail

Yes, your bank should be able to tell you whether the draft has  been cashed and, if there is proof that it has been stolen, get it stopped. However, stealing drafts is not the easiest thing as most Irish banks these days issue them crossed, which means they can only be paid into the account of the person to whom they are made out. If not, there should be no trouble retrieving the money from whatever institution erroneously cashed such a draft.

The Irish Bankers' Federation advises that paper-based transactions, such as drafts, take up to 21 working days to clear between the Republic and Britain.

Inheritance

I inherited a farm in 1996 and availed of agricultural relief to minimise the tax incurred. At the time one had to hold the property for a minimum of 10 years to avoid claw-back of the relief. I understand that the holding period is now six years and wonder if this applies retrospectively or does the 10-year rule still apply to me?

Mr B.L., Dublin

The agricultural relief to which you refer is a relief under capital acquisitions tax - or inheritance tax, as it is more commonly known. As you say, back in 1996, there was a 10-year rule on such relief. The Finance Act of 2000 changed this, bringing the time period governing the relief down to six years.

You will be glad to hear that, under section 140 of the Act, situations such as yours are covered.

The six-year rule applies to all such property in receipt of agricultural relief that has not been sold by that time.

SSIAs

If you have paid your contribution for one complete year, is it possible to freeze your special savings incentive account payments for three to six months due to certain exceptions - i.e. maternity leave/sickness? If so, when you return to work, can you restart payments at the original level plus the three- to six-month extension?

Ms S.W., Waterford

Not quite. You have got it quite right that the first necessity is to continue paying your monthly contribution to the SSIA for the first 12 months. If you fail to do that, you will find your account closed and everything in it taxed at 23 per cent - including the original sum you saved, which, of course, was already subject to income tax.

After that first year, you have a lot of discretion. You can stop payments for a number of months or even stop paying altogether for the remaining four years of the scheme. You will still benefit from the Government contribution on the money you have saved and on any interest or investment return that has accrued.

Of course, you will need to check with your SSIA provider that it does not have any in-house rules that would cause you trouble in this regard but, if so, you should be able to move the account to a more accommodating institution - at no cost in the case of variable-rate deposit SSIAs.

However, there is no provision in the scheme to allow someone to pay back money for months they have missed for any reason. After all, the scheme was designed to encourage the creation of a savings habit by setting money aside monthly. What you can do is alter your payments up to a maximum of €254 to make up the shortfall, if you are not already paying the maximum.

Investment

In February 2000, I invested £20,000 as follows: £10,000 in the Irish Life EuroScope series 1, £5,000 in the Irish Life TeleScope Series 1 and £5,000 in the Irish Life TechScope Series 1. These investments were recently valued at £7,673, £2,204 and £2,747 respectively. What is the best option - sit tight until the market revives or switch to a less-exposed investment?

Ms B.F., Wexford

The Irish Life Scope series of funds seems to have attracted a lot of investors keen to tap into the traditionally better growth of equities, while avoiding the "all eggs in one basket" approach that proved so costly with Eircom.

They provide easy access to portfolio investing, although the leaflet promoting the funds is somewhat dismissive of the need for vigilance among investors. For instance, you no doubt will smile wryly should you re-read the "myth" that "investing in shares is only for money that you can afford to lose", which the company sidesteps by saying: "Scope is about making your investment grow."

I'm sure that is the intent but it is not very effective at all times, as your figures show. Having said that, Irish Life assures me that potential customers are given full financial advice and have the risks as well as the rewards of stock investment outlined to them. The truth is that stock markets will, over time, grow faster than other forms of investments, such as property, bonds and cash.

However, that is not to say that all equity investment will grow - just that the market overall will. In your case, the biggest doubts, as your figures show, surround the technology and telecoms sectors.

To be fair, Irish Life does make clear that these funds are the most volatile and risky of the range on offer.

What now, then? It would appear that EuroScope is simply reflecting the current bear market and is likely to come back at some time. Similarly, the TechScope fund aims to track the

Nasdaq 100 and there is a betting chance that this will recover your money and more, though no certainty.

The one I would be chary about is the TeleScope investment.

Telecoms are still not out of the woods and each passing week seems to bring more bad news for the sector. I would be inclined to use the option you have in the Scope scheme to switch free of charge out of that fund into one of the less risky options. Of course, I am no qualified financial adviser and it might pay you to lay out your situation and options before a fully independent adviser.

Please send your queries to Dominic Coyle, Q&A, The Irish Times,
D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.