Wealth Check: Dresses, jets and not living on a wing and a prayer

She owns a boutique, he's in the RAF and they want to build wealth without flying too close to the sun. By Harriet Meyer

The patients

As a young family keen to secure their financial future, Karen Bremner, 36, and Darren Lownds, 34, want to choose the right home for their spare cash.

"We're looking to invest for the long term," says Karen. "And we don't feel we're making the most of our money."

The couple, from Newbigging, Scotland, have a four-year-old son, Cameron. Karen, a contestant on the second series of The Apprentice, owns a ladies' clothing boutique while Darren is a navigator for the Royal Air Force. They have a combined salary of around £100,000. "It's a little tricky to say how much we earn exactly as I haven't run the shop for a full year," she says. "But I estimate it to be around this sum."

Most of their finances are managed through the One Account, formerly branded Virgin One, which pools all their money into one pot, including savings, current accounts and the home loan at a rate of 6.45 per cent. This enables them to offset their salaries against their mortgage debt to reduce the sum incurring interest.

They have a 20-year £60,000 loan on their four-bed house, bought for £245,000 two and a half years ago. It is now worth around £350,000.

The couple also have stock market investments, with £1,000 in a Lloyds TSB personal equity plan (PEP) and £18,000 in a shares individual savings account at Canada Life. They pay £150 a month into this ISA.

However, choosing investments can cause problems as the couple have conflicting attitudes to risk.

"I am a typical canny Scot and nervous of putting money into things," says Karen. "Darren is the spender in the relationship."

For retirement needs, she paid into a previous employer's final salary pension scheme for 12 years, which is set to pay out an annual income of around £9,000. He pays 5 per cent of salary into the Armed Forces Pension Scheme, and has done so for nine years.

The family have no protection policies in place.

The cure

With substantial equity in their home, a small mortgage and good incomes giving potential for future savings, the family's finances are in decent shape, agree our panel of independent financial advisers (IFAs).

To make the most of their money, they should balance paying off the mortgage with tax-efficient investment vehicles. They should also put protection in place in case anything untoward happens.

Savings/investments

While Karen admits to being a cautious investor, a diversified portfolio of funds is far more likely to produce positive returns in the long run than a deposit account, stresses Alex Pegley of IFA firm Calculis.

They should begin by checking the performance of the funds they already hold. "Investments are like any other product," adds Mr Pegley. "Over time, better alternatives may become available."

He recommends BlackRock's UK Absolute Alpha fund, which aims to deliver positive returns regardless of whether the stock market is heading down – handy in the current climate. As well as shares, the fund invests in derivatives such as futures. The idea is that Absolute Alpha hedges its bets so that even if share prices fall, the returns from the derivatives are such that overall growth is achieved.

The couple could also use some of the money held in the PEP and ISA to pay off a chunk of their mortgage, says Mr Pegley.

Property

Their use of an offset mortgage is a tax-efficient and effective way to pay off a loan early, Mr Pegley continues. The large sums of cash flowing through the account will reduce the sum on which they pay interest, and shorten the term of the mortgage.

Additionally, offsetting allows them to avoid paying tax on any savings interest. This arrangement is particularly suitable for higher-rate taxpayers such as Karen and Darren, who lose 40 per cent of their interest to tax when they hold money in traditional savings accounts.

"But it does require discipline," adds Mr Pegley, "and too frequently people end up trimming only a little off their mortgage because they dip into the funds."

To pay off their debt as quickly as possible, they should set a target for when they want to be mortgage- free, such as five years from now, says Dennis Hall of IFA Yellowtail Financial Planning. Then they can plan how to achieve this by making hefty overpayments when possible.

Retirement

Darren should boost his pension benefits by making additional contributions to his final salary scheme, says Mr Hall, while Karen should start paying into a private plan.

"They key attraction of pensions is the tax relief, and as a higher-rate tax-payer, Karen would be wise to take advantage of this," says Mr Pegley. While she has good benefits from her previous scheme, starting another plan will maximise growth over the long term.

Karen can start a pension with a modest monthly contribution topped up with lump sums as her business grows, comment Kevin Anderson of IFA Budge and Company.

Protection

With a young son to look after, the couple must consider what cover they need to guard against any unforeseen events such as death or disability.

Karen will receive no benefits from the Armed Forces Pension Scheme if Darren were to die in service, warns Mr Anderson, because the couple are unmarried. However, Darren can investigate what options are available to him through the RAF.

"For example, there is a Dependants Fund which would pay out a lump sum of £10,000 tax-free to his next of kin if he were to die in service. This comes at a monthly cost of just 45p."

They should also take out life insurance, which is "relatively inexpensive but extremely valuable if needed," adds Mr Anderson.

Karen should also think about buying income protection cover, which is particularly important for the self-employed and will keep the money coming in if she is unable to work.