REAL LIVES

Ethical PEPs ... the best rates for Tessas ... investment spreads. Each week we answer your letters on everyday financial concerns

Where can I find a review of the available ethical and eco-friendly personal equity plans (PEPs)? And will I lose out in terms of investment returns?

WE, Worcester

One of the best guides on this subject comes from Eiris - the Ethical Investment Research Service. Money and Ethics (pounds 12.50) is a guide to ethical and eco-friendly PEPs, pensions, endowments and other investment plans. Write to Eiris, 504 Bondway Business Centre, 71 Bondway, London SW8 1SQ.

Some financial advisers specialise in the area of ethical investment plans. Holden Meehan (0117 925 2874) can send you its free guide.

At core, ethical and eco-friendly investment is about avoiding investments in, for example, the arms trade or companies with a poor pollution record. Positively seeking out ethical investments can also be a feature. The historical evidence suggests that choosing an ethical or environmental investment is much like choosing other investments when it comes to performance. Some will be among the pace-setters while others will trail among the also-rans.

Better performing unit trusts (also normally on offer in PEP form) over recent periods include the following: Friends Provident Stewardship, ranked 33rd out of 123 funds in its peer group of UK Equity Growth unit trusts over five years; NPI Global Care, ranked 36th out of 147 funds in the International Growth category; Jupiter Ecology, a specifically environmental fund - 37th out of 127 funds over five years in the International sector.

It is true, however, that ethical and environmental funds may miss out on the absolute best performance because there will always be investments closed to them. For example, funds that invest in developing economies can produce some of the best results, but ethical funds have tended to avoid such investments. In part, this reflects lack of information on, for example, environmental standards, but there are also doubts about some of the labour practices of companies operating in these countries.

How can I find the best Tessa for my savings of pounds 5,800?

NM, London

The first place to look is probably our guide to best savings rates on this page. We give the current top-paying tax-free Tessas and you will get a feel for the best rates available.

The information is provided by Moneyfacts. It publishes a complete list of Tessas with current rates and conditions in a monthly bulletin. The normal price is pounds 48.50 for a year's subscription, but Independent on Sunday readers can get a single free copy (01692 500677).

Tessas are now a two-tier market, with some aimed at everyone and other "follow-on" Tessas aimed specifically at people who have money from an earlier Tessa that has reached the end of its five-year life. The first- year investment limit is higher for a follow-on Tessa. You can reinvest all the capital of up to pounds 9,000 from your first Tessa. But you must do this within six months of your first Tessa maturing. The first-year investment limit for normal Tessas is pounds 3,000.

You may feel inclined to go for the Tessa that offers the best rate at the moment. The problem is that you cannot be sure that rate will remain competitive. For this reason, you could opt for a Tessa that both pays a good rate and that makes transferring your custom elsewhere relatively cheap. You are allowed to transfer your Tessa without losing the tax benefits and without having to start your five-year term all over again. But most banks and building societies will penalise you to a greater or lesser degree.

If the rate and transfer terms look good, consider a Tessa with a building society that may yet convert to a bank. You could benefit from a windfall.

Can you explain the term "spread" when used in relation to investments?

VJ, Wirral

The spread is the part of your investment that vanishes into the ether - or, at least, into the bank accounts of financial advisers, fund management companies and stock exchange market-makers. If the spread is 5 per cent, you lose 5 per cent of your money immediately.

The spread is the difference between the higher price at which you can buy an investment (the offer price) and the lower selling price when you cash in (the bid price). So if you invest pounds 1,000 and immediately cash in your investment, a 5 per cent spread would mean that you get back only pounds 950.

To look at it another way, your net investment of pounds 950 has to grow by pounds 50 or 5.26 per cent just for you to get your money back (pounds 50 is 5.26 per cent of pounds 950). Generally, you should consider an investment with a large spread only if you intend to invest for the medium to long term.

With unit trusts and PEPs, the spread is often greater than the quoted "initial charge". The spread includes the initial charge but other costs as well. So a trust with an initial charge of 5 per cent may have a spread of more than 6 per cent.

Spreads on shares can vary enormously. With large, heavily traded companies such as privatisations, it may be less than 1 per cent. But it can be considerably wider with smaller companies. Always check the spread before committing your money.

q Write to Steve Lodge, personal finance editor, Readers' Lives, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number. Do not enclose SAEs or documents that you want returned. We cannot give personal replies and cannot guarantee to answer every letter in Readers' Lives. We accept no legal responsibility for advice.

Telephone % Rate and Max Fee Incentive Redemption period adv % penalty

MORTGAGES

Fixed rates

Scarborough BS 0800 590547 0.05 for 1 year 70 0.75% - 1st 5 yrs:7.19% of sum repaid

FirstMorgage 0800 080088 3.75 to 1/7/98 75 pounds 275 To 1/7/01: 5% of advance

Northern Rock BS 0800 591500 7.49 to 1/8/01 95 pounds 295 - 1st 6 yrs: 5% of sum repaid

Variable rates

Hinckley&Rugby BS 0800 774499 0.00 for 9 months 70 pounds 250 Free valuation 1st 5 yrs: dis recl'd & 3 m int

Greenwich BS 0181 858 8212 4.19 for 3 years 95 - 1st 5 yrs: discount reclaimed

Bradford & Bing BS 0800 252993 5.54 for 5 years 85 - 6 mths free ASU. 1st 5 yrs:6 mths int

First time buyers fixed rates

Bristol & West BS 0800 608088 0.95 to 30/6/97 90 pounds 275 - To 30/6/01: 8/6 mths interst

FirstMorgage 0800 080088 7.40 to 1/8/01 90 pounds 275 To 1/8/05: 5% of advance

Lambeth BS 0800 225221 4.19 to 1/9/98 95 pounds 295 0.5% of adv rebated 1st 5yrs:6mths int&rebate recd

First time buyers variable rates

Principality BS 01222 344188 1.00 to 1/7/97 90 - - To 30/6/01: discount reclmd

Greenwich BS 0181 858 8212 3.39 for 2 years 95 - - 1st 5 yrs: discount reclmd

Halifax BS 0800 101110 5.43 to 30/9/01 90 - pounds 300 & free valn To 30/9/03: 1-4% of advance

PERSONAL LOANS

Telephone APR Fixed monthly payments (pounds 3,000 over 3 years)

Unsecured With insurance Without insurance

Direct Line 0141 248 9966 13.90E pounds 112.86 pounds 101.33

Alliance & Leicester 0116 262 6262 14.80 pounds 114.93 pounds 102.36

Midland Bank 0800 180180 14.90 pounds 115.82 pounds 102.49

Secured (second charge) Max LTV Advance Term

Clydesdale Bank 0800 240024 7.50 Neg pounds 3K - pounds 15K 6 mths to 25 years

Royal B of Scotland 0131 523 7023 8.70 70% pounds 2.5K-pounds 100K 3 years to retirement

Barclays Bank 0800 000929 9.3/9.6 wef 1.8.96 80% pounds 10K-75K 5 to 25 years

OVERDRAFTS

Authorised Unauthorised

Telephone Account % pm APR % pm APR

Woolwich BS 0800 400900 Current 0.76 9.5 2.18 29.5

Alliance & Leicester 0500 959595 Alliance 0.76 9.5 2.20 29.8

Abbey National 0500 200500 Current 0.94 11.9 2.18 29.5

CREDIT CARDS

Telephone Card Min Rate APR Annual Int. free income pm % % fee period

Standard

Robert Fleming/S&P 0800 829024 MasterCard/Visa - 0.8958 11.20 nil 0 days

NatWest Bank 0800 200400 Access 0.95N 12.00N nil N 56 days

Robert Fleming/S&P 0800 829024 MasterCard/Visa - 1.00 14.00 pounds 12 56 days

Gold cards

Co-operative Bank 0345 212212 Visa pounds 20,000 0.4792 10.32 pounds 120 46 days

Royal B of Scotland 01702 362890 Visa pounds 20,000 1.05N 14.50N pounds 35 46 days

NatWest Bank 0800 200400 Visa pounds 20,000 1.14 15.90 pounds 35 56 days

STORE CARDS

Telephone Payment by direct debit Payment by other methods % pm APR % pm APR

John Lewis in store - - 1.39 18.00

Marks and Spencer 01244 681681 1.87 24.80 1.97 26.30

Sears in store 1.94 25.90 2.20 29.80

APR Annualised percentage rate. B+C Buildings and Contents insurance LTV Loan to value ASU Accident, sickness and unemployment

E Available to comprehensive motor insurance policyholders aged over 22 years.

N Introductory rate for a limited period.

. .

All rates subject to change without notice. Source: MONEYFACTS 01692 500677 27 June 1996

Telephone number

Account

Notice or term

Deposit

Rate %

Interest interval

INSTANT ACCESS

Portman BS 01202 292444 Instant Access Instant pounds 100 4.80 Year

Sun Banking Corp 01438 744505 Liquidity Instant pounds 25,000 5.25 Year

Skipton BS 01756 700511 High Street Instant pounds 30,000 5.50 Year

INSTANT ACCESS POSTAL ACCOUNTS

Yorkshire BS 0800 378836 First Class Access Postal pounds 1,000 4.90 Year

Alliance & Leic BS 0645 645660 Instant Direct Postal pounds 5,000 5.40 Year

Bristol & West BS 0800 901109 Instant Access Postal Postal pounds 10,000 5.75 Year

NOTICE ACCOUNTS & BONDS

Coventry BS 0345 665522 Postal 50 50 day P pounds 2,000 5.45 Year

Coventry BS 0345 665522 Postal 50 50 day P pounds 10,000 6.10 Year

First National BS 0800 558844 90 Day Notice 90 day P pounds 10,000 6.20 Year

CHEQUE ACCOUNTS

Kleinwort Benson 01202 502404 HICA Instant pounds 2,500 5.00 Month

Halifax BS 01422 335333 Asset Reserve Instant pounds 10,000 4.30 Quarter

Chelsea BS 0800 717515 Classic Postal Instant pounds 10,000 4.75 Year

FIXED RATE BONDS

Bristol & West BS 0800 202121 Year Plus Fixed Bond 5/11/97 pounds 5,000 6.50F Maturity

Universal BS 0800 281496 Fixed Rate Bond 2 Year pounds 5,000 7.00F Year

Northern Rock BS 0500 505000 Postal Deposit Bond 30/6/99 pounds 2,500 7.50F Year

FIRST TESSAS

Sun Banking Corp 01438 744505 5 years pounds 8,575 7.50F Year

NatWest Bank 0800 200400 5 years pounds 5,000 7.45F Year

Birmingham Midshires 0645 720721 5 years pounds 1,000 7.25 Year

FOLLOW-ON TESSAS

Sun Banking Corp 01438 744505 5 years pounds 9,000 7.50F Year

Northern Rock BS 0500 505000 5 years pounds 9,000 7.50 Year

Natwest Bank 0800 200400 5 years pounds 5,000 7.45F Year

GUARANTEED INCOME BONDS (net)

AIG Life 0181 680 7172 1 year pounds 10,000 4.70FN Year

Pinnacle Assurance 0181 207 9007 2 years pounds 3,000 5.70FN Year

Pinnacle Assurance 0181 207 9007 3 years pounds 3,000 5.90FN Year

Pinnacle Assurance 0181 270 9007 4 years pounds 3,000 6.40FN Year

OFFSHORE ACCOUNTS (gross)

Northern Rock, Guern 01481 714600 Offshore Instant Instant pounds 10,000 6.30 Year

Northern Rock, Guern 01481 714600 Offshore Instant Instant pounds 50,000 6.60 Year

Britannia International 01624 628512 2 Year Bond 31/7/98 pounds 5,000 7.00F Year

Skipton, Guern 01481 727374 3 Year Bond 31/5/99 pounds 10,000 7.40F Year

NATIONAL SAVINGS ACCOUNTS (gross)

Investment Accounts 1 month pounds 20 5.00 Year

pounds 500 5.50 Year

pounds 25,000 5.75 Year

Income Bonds 3 months pounds 2,000 6.25 Month

pounds 25,000 6.50 Month

Capital Bond Series J 5 years pounds 100 6.65F Maturity

First Option Bonds 12 months pounds 1,000 6.25F Year

pounds 20,000 6.50F Year

Pensioner's G'teed Income Bond Series 3 5 year pounds 500 7.00F Month

NS Certificates (tax-free) 43nd issue 5 year pounds 100 5.35F Maturity

9th Index linked 5 year pounds 100 2.50+rpi Maturity

Children's Bond Issue H 5 year pounds 25 6.75F Maturity

P post only F fixed rate

N net rate A All withdrawals subject ot 30 day loss of interest All rates are shown gross and are subject to change without notice. Source: MONEYFACTS 01692 500677. 27 June 1996