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Friendly Societies - £25/month tax free
choc_mouse
Posts: 487 Forumite
What are they and who are they ideally suited for?
I only just heard about these the other day which allows £25/month to be saved tax free. I quickly crunched some numbers and looked at the fund terms of a few being offered; it didn't come out particularly rewarding. Low gains (if any) especially with the small amount that can be saved; long term - at least 10 years with likely loss of original value if withdrawn early; some losing all entitlement if withdrawn within 2 years. High fees, further reducing your fund value...
Give it a miss?
I only just heard about these the other day which allows £25/month to be saved tax free. I quickly crunched some numbers and looked at the fund terms of a few being offered; it didn't come out particularly rewarding. Low gains (if any) especially with the small amount that can be saved; long term - at least 10 years with likely loss of original value if withdrawn early; some losing all entitlement if withdrawn within 2 years. High fees, further reducing your fund value...
Give it a miss?
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Comments
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choc_mouse wrote: »
Give it a miss?
Yes. Is the concensus of advice you will normally get on these forums. For the reasons you have mainly highlighted. Small savings allied to high fees is a general turn off?If you want to test the depth of the water .........don't use both feet !0 -
They should just scrap this and increase the ISA limits by £300/year then
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I think they were originally designed as a savings scheme and also to give life insurance in case the policy holder died. But the life insurance payout is only about 2k or 3k. Many years ago, this might have been sufficient but nowadays is woefully inadequate.0
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But the life insurance payout is only about 2k or 3k. Many years ago, this might have been sufficient but nowadays is woefully inadequate.
Or indeed the princely sum of £900!
That's on a tenner a month to Family Assurance Society, taken out on a whim in 2000. Last payment's due out in September, but if I kick the bucket before then I'm sure 'My Spouse' (they don't even name him) will be glad of this huge sum to assist with incinerating me!
Pro rata £2250 on the full £25/month I guess, so you're on the mark with £2-3k.
Last statement was Apr 09 and for £1160 in at that time it was worth £960, so maybe I'd better hang around a bit longer to at least get my money back at some point! I got it for no initial charges as I already had an older bond: finished contributing 2006 and the following year this one was practically 50% ahead of what I'd paid in altogether. Should have got it out then if I'd been paying attention, as it's dropped since, but still in profit. Well, sort of if you ignore inflation.~cottager0 -
Thanks for the breakdown cottager - at least I can tell this investment is certainly not for me.
At £25/month, you could probably get a basic life insurance package; or upgrade your current account to include all those extras; or...buy the lottery in the hope of winning big!0 -
I did £10 a month for 10 years with Scottish Friendly through all the 'good times' and received my cheque for £1050 !! When I asked them why I had lost money they said it was due to the credit crunch - when I asked them about the previous 9 years they couldn't answer. Don't touch them!!! :mad:0
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With the ISA limit going up to £10200 for Shares and £5100 for cash, I can't imagine anyone going with these investments anymore. Certainly if you've got the sort of disposible income that exceeds £850pm (for S&S ISA) or £425 (for Cash ISA) you won't give these the time of day.
If you do exceed the ISA savings limit, look at National Savings bonds or even premium bonds before looking at these dismal Friendly Society investments."I can hear you whisperin', children, so I know you're down there. I can feel myself gettin' awful mad. I'm out of patience, children. I'm coming to find you now." - Harry Powell, Night of the Hunter, 1955.0 -
When I asked them why I had lost money they said it was due to the credit crunch - when I asked them about the previous 9 years they couldn't answer.
Thats easily answered. The bulk of your money wasnt invested for during those 9 years.
For example. £10pm is £120 in year 1. Lets say you suffer a 40% loss in year one. You lose just £48. Lets say your value in year 9 is £1100. Along comes a 40% drop and that £1100 has lost £440 and is now only worth £660.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Harry_Powell wrote: »If you do exceed the ISA savings limit, look at National Savings bonds or even premium bonds before looking at these dismal Friendly Society investments.
Agreed. It seems you either commit to the full term and hope for the best or just avoid it!
The small amount (for me anyway) is what puts me off. I'm sure one could hypothetically fiddle expenses to earn more than friendly societies.
I only looked it up because there was a £50 cashback offer if I were to open a friendly society account for at least 2 months = definite loss. Thanks all for the supportive answers.0 -
Thats easily answered. The bulk of your money wasnt invested for during those 9 years.
For example. £10pm is £120 in year 1. Lets say you suffer a 40% loss in year one. You lose just £48. Lets say your value in year 9 is £1100. Along comes a 40% drop and that £1100 has lost £440 and is now only worth £660.
I was told that during the latter years the investments are kept in much lower risk places so that this shouldn't happen!
Anyway I kept getting letters from Scottish Friendly asking me to reinvest with them since I have already had experience of how they make my money work and swiftly told them not to bother me anymore!!0
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