Halifax Guarenteed Investment Plan - wa!

steeveecee

Hello

Could anyone please share their thoughts on an investment I made a while ago?

In Decemeber 2006 Halifax invited me in for a financial review and I left having invested some savings into a Guarenteed Investment Plan... At the time I was pretty busy so didn't really pay much attention to what the package involved, just the fact that it was locked for 5 years and there was a guarentee.

Browsing through these forums I now understand that taking out this plan was not the best investment for my savings, but it is best I wait until the 5 years are up rather than taking it all out now - unless anyone has any other suggestions?

The plan includes St Andrews Life Assurance which I didn't want but left it too late for the reimburse period. I'm guessing a portion of my investment is being fed into it. If I cancel it now I guess I will just lose the amount already paid to them?

I'm a bit fed up with it all really so any advice to stop me from cancelling it all and just accepting the loss would be most appreciated! Bah - if only I found this site earlier...

dunstonh

but it is best I wait until the 5 years are up rather than taking it all out now - unless anyone has any other suggestions?

Some of these allow early exit with little or no penalty. If the alternatives are better or offer better potential then a small step backwards to take two forward can be a good move.

cheerfulcat

Hi, there,

Well, the good news is that this is not a guaranteed equity bond ( GEB ) which is most likely what you have seen discussed here in less than glowing terms.

This Guaranteed Investment Plan from Halifax seems to be actually invested in a mixture of equities and bonds. It's probably not a great product but it's probably not the worst either ( dunstonh may be able to shed some light on that ).

dunstonh

dunstonh may be able to shed some light on that

Its a unit linked investment in life funds. There is a guarantee on death (not an uncommon guarantee). There is no initial charge but the product has a high annual management charge (smoke and mirrors from Halifax there by saying there is no initial charge but then charging 0.75%-1% p.a. more than whole of market options which ends up costing much more than an initial charge. i.e. Clerical Medical can do 108% allocation and charge 0.8% p.a. into life funds from IFAs. CM is owned by the Halifax but only retail CM products via IFAs. Not saying CM is best but just comparing charges of similar products from the same group to show how poor the Halifax product is.

There is only two funds available on it. The guaranteed one is a sort of stepped guarantee that a number of providers offer where it increases when it goes up but then cant fall back below those certain levels. A sort of lock in that is reviewed periodically.

Better concept than the GEBs that they normally sell but not as competitive as whole of market options available and the options on it are weak. It is also a waste of the life funds tax wrapper as that is best suited now to fixed interest funds rather than equities for a lot of people and you can get similar to this unwrapped in unit trust form or within an ISA.

Encashment may see the loss of the guarantee meaning you could get back less than you paid in. So you must ask for current value and surrender value to see if there is a difference.

steeveecee

dunstonh wrote: »

Some of these allow early exit with little or no penalty. If the alternatives are better or offer better potential then a small step backwards to take two forward can be a good move.

I gave them a call and they said I can cash in without any charges, at the value the units are worth on the day. Currently it's looking like a loss of £300 from my original investment , but reinvesting in a high interest saving account over the same period of time could work out better in the long run anyway?

dunstonh

but reinvesting in a high interest saving account over the same period of time could work out better in the long run anyway?

Could do. It could also work out to be worse.

You are effectively comparing a savings account rate that is likely to roughly keep up with inflation against an investment which will fluctuate in value and at times will be worse than savings and at times better. Over the longer term you would expect the investment to outperform savings.

steeveecee

I just got a letter from Halifax about my GIP. To summarise:

"The unprecedented losses in the stock market in 2008 together with the current economic climate mean that the entire fund is now invested in fixes interest assets, having moved away from equities to protect your investment in line with the fund's guarantees. Furthermore, the return from these assets is currently very low due to the sharp and sustained fall in interest rates that has occurred. It is unlikely your investment will grow further in the short to medium term as we expect interest rates to remain low for some time; in face it is now more likely that your investment will gradually fall in value over the remaining period to 01/03/2012 when the 'money back' guarantee applies.
...
If you decide to withdraw all of your funds, the amount you could get back depends on whether the withdrawal is before of after the 5th anniversary of the Guarantee Valuation Date:

- If you withdraw all you funds before the 5th anniversary of the Guarantee Valuation Date, you will receive the higher of either (a). 80% of the highest ever unit value, or (b). 100% of the fund value at the time of withdrawal, or

- If you withdraw all you funds after the 5th anniversary of the Guarantee Valuation Date, you will receive the higher of (a). 80% of the highest ever unit value, (b). 100% of the fund value at the time of withdrawal, or (c). the money back guarantee value."

Now it's a no brainer for me to pull the funds, but I'm wondering if there is any point waiting until after the Guarantee Valuation Date? At the moment the investment value is £200 more than what I put in, so from the wording I should receive 100% of this if I take it out now.